Intel ready to take on tablet chips

Intel is ready to start cranking out chips for tablets, but is the chip maker moving fast enough to boost its presence in the mobile market?

Intel COO Brian Krzanich told Reuters this week that the company has quickly reworked its fabrication facilities to prep for building tablet chips.

"We will start to see more and more of our capacity and our output go to things that are mobile, like phones and tablets and other devices," Krzanich told Reuters.

While industry analysts say it's a good move for Intel to move into the tablet market, it's going to be more important for the chip maker to gain ground in the burgeoning smartphone market.

"Mobile devices -- outside of the traditional laptop -- are a critical segment for Intel," said Dan Olds, an analyst with The Gabriel Consulting Group. "While there are hundreds of millions of traditional x86 PC and server chips sold every year, the volume for ARM chips -- the typical smartphone and tablet processor -- is in the billions and growing at a much faster rate. Intel still has a lock on PCs and servers, but it barely has any presence in smartphones and is just now gaining a toehold in tablets."

While it's smart for Intel to move into the mobile market, the issue with the hot tablet market is that much of activity there surrounds Apple's iPad. With the iPad making up so much of that market, there isn't a big need yet for an Intel tablet chip.

Even so, Intel should be ready in case an Android tablet or Microsoft's Windows 8 can generate non-iPad excitement in the tablet market, according to Patrick Moorhead, an analyst with Moor Insights & Strategy. "Intel didn't miss much by sitting out a few rounds," he added. "With Windows 8 expected in Q4, [Intel's] timing is actually good. The fact that Intel is gearing up the fabs shows confidence in their offering."

Intel has been moving in the tablet direction for a while.

In January, Intel created a stir at the Consumer Electronics Show in Las Vegas as several PC vendors showed off their Intel-based Ultrabooks, which are lightweight mobile PCs with rapid-start technology and long battery life.

Intel expects about 75 Ultrabooks to be released throughout 2012. Some of those Ultrabooks will be hybrid machines, meaning they act and look like both laptops and tablets.

"It's a little too soon to know how much headway the Ultrabooks are making versus their tablet competitors, primarily Apple," said Olds. "I think the Ultrabook systems provide much of the tablet goodness that users want - fast boot times, small form factors, and long battery life. And the Ultrabooks have an advantage in that they also run the PC software that users already own and know."

Charles King, an analyst with Pund-IT, Inc., noted that moving into the tablet market isn't important to Intel alone.

"Finding a way to combat Apple is crucial to Intel's OEM partners and if they can't find an effective x86 weapon to do the job, those partners will likely look elsewhere," he said. "I think Intel is moving as quickly as they possibly can."