VIA Technologies Hit By Intel's Atom Bomb

When Intel (s INTC) announced its low-power Silverthorne chip in 2007 aimed at the mobile computing market, the folks at Centaur Technology, who had been designing low-power x86 chips for mobiles under Taiwanese parent company VIA Technologies, were vindicated. They also suddenly faced direct competition from the giant in the industry.

“Intel has made this a legitimate marketplace where before few companies would use such a low-power chip in a laptop,” said Glenn Henry, CEO and founder of Centaur in an interview with me yesterday at Centaur’s Austin, Texas, headquarters. That means VIA is seeing opportunities upmarket even as Intel moves down. However, those opportunities don’t appear to be translating into revenue yet: VIA’s sales for 2008 were $241.6 million down 46 percent from 2007 sales of $447.7 million.

Now, with Intel’s Atom chip shipping, Henry says he’s glad for the attention mobile computing is receiving. Intel’s Atom has led to increased interest and design wins for VIA’s chipsets, but he scoffs at the current screen size limitations Intel is trying to push with its differentiation between netbooks, notebooks, mobile Internet devices and smartphones. VIA may not have the pricing power or marketing muscle of Intel, but it also doesn’t have a high-margin line of fast mobile processors to protect. And Henry argues that will give VIA flexibility and more opportunities in the developing word where he sees plenty of growth and not a lot of room for high-priced brand name chips.

Henry says he’s doubtful that any x86 processor will replace ARM-based (s ARMH) application processors that offer even lower power for smartphones or superphones. As for the distinction between a notebook and netbook, his firm’s chips go into both (and even into low-cost desktops overseas), so he doesn’t concern himself with the size of a device’s screen as Intel does.

As for other mobile form factors, Henry predicts that notebooks and netbooks will basically be the same thing, much like Nvidia’s CEO does. And when it comes to whatever devices resides between a smartphone and a notebook, he’s less sure of the gadget, but believes that a special purpose always-connected web device could have value for users like a dedicated reader or Mp3 player does today. And yes, inside them would be x86 processors –hopefully VIA’s.