Intel reportedly planning $1B in tablet CPU marketing subsidies

|About: Intel Corporation (INTC)|By:, SA News Editor

Digitimes' supply chain sources report Intel (INTC +0.7%) plans to offer $1B in 2014 marketing subsidies to tablet vendors adopting its CPUs.

They also state Intel is offering huge price discounts to large OEMs using its new Bay Trail Atom CPUs, and even bundling baseband chips for free, but Intel's Taiwanese unit denies those claims.

Intel has a long history of providing OEMs with marketing subsidies, and the chip giant has made it clear it's willing to spend aggressively to make up for lost time in a tablet CPU market currently dominated by MediaTek, Qualcomm, and Apple/Samsung's in-house processors.

Last week, Intel set a goal of quadrupling its tablet CPU shipments in 2014 to 40M (would be good for a 14% share based on Canalys' latest 2014 tablet forecast).

RBC, which cut shares to Hold this morning, thinks Intel is spending $800M (via shared project/R&D spend and contra revenue) to grow its mobile CPU presence, and forecasts the spending will only yield near-term op. income of $200M. Moreover, the firm sees Intel's combined notebook/mobile processor sales posting only a 3% CAGR from 2013-2016, as soaring Atom sales are offset by declining sales of traditional PC CPUs.

The Other Intel Architecture unit, which includes Intel's Atom and baseband chip ops (among other things), had a $606M Q3 op. loss on $1.1B of revenue.