"While INTC has been the King of Execution, weathering the 2011 storms, with the stock up 16% versus the SOX down 12%, we believe 2012-2014 could see headwinds in its core PC market with ARM/Win8 and lower ASPs," he writes in a research note. They key issue: Microsoft is preparing a version of Windows 8 that will run on ARM based processors; he worries some PC makers will choose to make enough PCs with ARM chips to eat into Intel's domination of the PC microprocessor market.
Rakesh says he thinks major PC OEMs will move 10%-15% of their product mix to ARM-based PCs in the 2012-2013 time period. And he says the company's move into smartphone processors with its Medfield system-on-a-chip line will not be material enough to offset the losses in the core market. In particular, he thinks low-end PCs targeting emerging markets could shift to a "WARM" - Windows on ARM - solution.
The analyst advises investors swap into Qualcomm, which he contends is "best positioned" to capitalize on smartphone growth and the arrival of ARM-based Windows PCs.
INTC this morning is down 21 cents, or 0.8%, to $25.19.
For a more bullish view see: CES: This Year, Intel Takes The Spotlight
