Tech Hardware Supply Chain - Gazhoo

Bhavin Shah
(852) 2800-8538
bhavin.a.shah@jpmorgan.com
Asia Pacific Equity Research
20 April 2009
Limited success outside PCs for Atom
Although we believe Atom will be successful in the PC end-market in both desktop
and notebook end-markets, most of the demand should be due to cannibalization
from existing Celeron customers. We do not believe Atom will gain much traction in
mobile internet devices, consumer electronics, or embedded applications due to its
shortcomings in cost and power consumption versus ARM chips and ASICs.
Cannibalization
Our checks in the PC and retail channels indicate Atom is beginning to cannibalize
Intel’s Celeron sales. Although the cannibalization should have little impact on
Intel’s model in the near term due to the low number of Atom’s sales relative to other
processors, we are concerned that Atom could eventually cannibalize Pentium
revenue if its performance improves.
Qualcomm’s Snapdragon solution
Intel’s Atom processor has been successful due to its much lower price point (US$30
for Diamondville, US$50-60 for Silverthorne) and low power consumption (2.5W for
Diamondville, 2W for Silverthorne for CPU + chipset), in our view. Now,
Qualcomm (QCOM) is coming up with a similar processor (1.5GHz), but with a
cheaper price (likely below US$20) and lower power (