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At the Intel (NASDAQ:INTC) Developers Forum last week, CEO Brian Krzanick announced a product line called "Quark"

A Quark is defined as an elementary particle and a fundamental constituent of matter. That would be in a dictionary definition. In the electronics world, Intel has picked "Quark" to describe an elemental computing device with applications as varied as the imagination of humans will permit.

The quark is described as being 1/5 the size and 1/10 the power of the new Sivermont Atom core.

I'm going to stop here and take a look at what has happened in the world of Intel process shrinks over the past few years. In 1995 the Pentium III was 9.5 Million transistors, built on a .25 micron process, and had a chip size of 128sq. mm. If that Pentium III were to be built on the current 22nm Trigate process the chip size would be about 1sq. mm. That isn't really possible since the chip would need to have pads for power and ground and some number of I/Os, so the real size of a basic Quark is probably 2sq. mm or a little over 1% of the size of the Pentium III of 1995. Pretty remarkable.

Mr. Krzanick described the devices as "fully synthesizable." So what does fully synthesizable really mean.

It means almost anything that you want it to mean. Intel will first design and offer standard product Quark SoCs such as the guts of remote entry devices for automobiles, or the chips that are used for wireless security systems. For every remote entry device there is a receiver inside the car that performs the command from your key fob. As a matter of fact there are about 20-30 of these simple microcontrollers is the cars of today. There are SoC image processors for the 5-6 cameras that are in or soon will be in the cars that we drive.

There is the "internet of things" with applications that are invaluable to us in the future and some that are simply ridiculous. Some useful devices might be might that gives you a notice on your smartphone if your furnace quits working when you are on vacation and it is 20 below at home. Or you might like to know if you water consumption is out-of-range due to a washing machine hose failure.

The applications for a little bit of intelligence combined with some sensors and radio communications are too many to discuss in depth here. The standard functions are pretty obvious and Intel will develop them and offer them at a low price. Two things can be assumed: Nearly all Quark products will use some kind of sensor to perform their functions and nearly all will communicate by radio. Not the crazy complex radio of LTE, but simple radio. This will be the kind of radio that Intel has demonstrated in a digital (and Moore Law compatible) format.

What about the inventive entrepreneurs who have great ideas that don't involve millions of devices. How will they use Quarks? I'm going out on a limb here and suggest that the basic Quark will be the Quark core surrounded by some kind of programmable logic that will be available to the Quark user/designer to make a custom chip of his own design without what are said to be $20 million dollar mask set charges for today's state of the art semiconductor processes. A small processor and a chunk of FPGA (Field Programmable Gate Array) is a good definition of "fully synthesizable".

Intel has had an unexplained foundry relationship with two startup FPGA companies, Achronix and Tabula for the past several years, perhaps the use of their technology in Quark is the reason behind taking on these early customers.

The real significance of Quark is that it represents the final missing piece of the Intel computing continuum. I'm guessing that the simplest of Quarks will sell for sub $1, with more sophisticated Quarks selling in the $3-8 price range.

Quark should seal the lips of those who claim that Intel needs big prices to generate big margins. Gross margin has nothing in the world to do with the size and complexity of chips; it has everything to do with process node advances and, in the case of Intel, a two node lead in process nodes.

The Quark initiative should make ARM (NASDAQ:ARMH) a little concerned, since ARM Quark-like cores are in literally billions of devices that we use every day. The ARM business model collects pennies or pieces of pennies for the royalties on every use of these cores. Since ARM Quark-like cores are used in literally billions of devices that we use every day. In total, these pennies make up a significant source of revenue for ARM. While we think of a cell phone when talking about ARM, much of their success comes from these billions of pennies.

Another company that would have reason for concern is Microchip Technology (NASDAQ:MCHP). Microchip has carved out a very lucrative niche in the low end programmable microcontroller business that Quark will likely compete with.

So, the Intel computing continuum from high to low is made up of Knight's Corner for super computers, XEONs of all shapes for the heavy lifting in data centers, of course our friend Haswell, in many flavors, for client PCs, we have the Silvermont Atom that will be configured in SoC versions optimized for Tablet computers, smartphones, and even low end sever chips. Now, with Quark for the Internet of Things, Intel completely blankets the computing business from top to bottom; from $5000 chips to sub-dollar Quarks.

Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Intel And Quarks