ARM to take on Intel in booming netbook space

TAIPEI, TAIWAN: British chip designer ARM aims to grab a foothold in the netbook market as PC makers launch six models using its processors this year, and it aims to take up to 30 percent share of the low-cost laptop market next year.

Taking on chip giant Intel, whose Atom processors dominate the netbook market, ARM said four to five PC makers, including Wistron and Pegatron, will introduce ARM-based netbooks this year, and at least 20 new netbook models will be launched next year.

"It's just a beginning and we are starting from a zero base," ARM Executive Vice President Mike Inglis told Reuters in an interview in Taipei ahead of the start of Computex, the world's second-biggest PC trade fair.

Analysts say Taiwan's contract PC makers could benefit from ARM's foray into the netbook market, but cheaper models could lead to lower margins.

"ARM could be a threat to Intel but such cheaper netbooks mean heavier pricing competition further down the road," said Andrew Deng, an analyst at Taiwan International Securities.

"There's no doubt that Taiwan's chip makers, chip packagers and testers and PC contract makers will benefit as a new player enters the market, but what I am concerned is their margins won't be high."

The new netbooks will have Linux-based software, which along with ARM's low-power processors can be sold below $200 per unit, Inglis said. Atom-based netbooks sold by netbook pioneer Asustek Computer sell for around $300-$400.

While Intel Corp dominates in PC chip technology, ARM designs processor cores for chips that power about 90 percent of the world's cellphones, and it earns licence fees when semiconductor makers agree to make chips based on its designs and royalties.

Companies including Texas Instruments, Freescale, Qualcomm, and Nvidia are developing devices based on ARM-technology that would be suitable for use in netbooks -- small, inexpensive notebooks designed for Web browsing.

ARM said global mobile phone market could grow 10-15 percent next year in terms of unit shipments, after an expected drop of 15 percent this year.

"Smartphone is still growing," said Inglis, who joined ARM in 2002 and is also general manager of the company's processor division.

About two-thirds of ARM-based chips make their way into mobile phones such as Apple's iPhone and T-Mobile's G1 Google phone.

"You can see the economy is stabilising," Inglis said. "Consumer spending is going to begin again."