Intel beats its 40m tablet goal, but at a heavy cost

Earlier this week, Intel announced last year’s financial results and they reveal that the company paid a heavy price to establish itself as a chipmaker in the tablet market.

Intel’s CEO Brian Krzanich announced that the company had achieved its goal of getting 40 million chips into tablets, but that this did have an effect on the division’s profit figures.

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“This goal was intended to establish Intel Architecture in the marketplace,” Krzanich said. “We don’t need to go out and outpace the market for this year. A key goal for mobility is to improve profitability.”

This profitability will need to be demonstrated by the firm’s mobile and communications division, which recorded a $4.21 billion (£2.8 billion) loss across 2014. The division only posted revenue of $202 million, 85 per cent less than 2013’s figure of $1.4 billion.

At the start of 2014, the tablet market was dominated by British firm ARM, leading Intel to set an ambitious target of shipping 40 million tablet chips during the calendar year. While Intel managed to exceed its goal (46 million units were sold), the firm had to heavily subsidise the chips to entice tablet manufacturers to use them, resulting in heavy losses.

Intel’s new range of mobile chips, called Sofia, is set to launch later this year and will be cheaper to manufacture, helping the firm offset some of the losses incurred in 2014.

Away from the mobility division, Intel’s earnings report made for more pleasant reading. The PC group posted a revenue figure of $34.7 billion, a year-on-year increase of $1.4 billion, while the server group made a profit of $7.28 billion.

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Perhaps most promising for the company, its recently launched Internet of Things group saw a revenue increase of 19 per cent compared to the previous 12 months, up to $2.1 billion.