Intel to Stop Subsidizing Android Tablets amid Hefty Losses

Intel will reportedly shut down its programme to give away hefty subsidies for the manufacturing cost of Android Atom tablet to its makers in upcoming year as Intel,s mobile chip division has to suffer an estimated loss worth of $7 billion over the last couple of years due to giving away those generous incentives in the market. Intel has been paying netbook and tablet manufacturers to switch from ARM processors to its own less expensive x86 atom based chipsets. These payments are intended to cover the cost of redesigning logic boards to influx Intel,s Atom rather than ARM chips like Nvidia and Qualcomm. Intel has consistently been trying to penetrate as Intel based mobile devices have not caught the eyes of public. Besides offering cheap prices for the Atom chips, Intel also agreed to cover the market budget mutually with the manufacturers. This move, one way or another, will push Apple to come in the market with more expensive tablets in order to squeeze down the expensive potential competitors. This is also a bad news for the fans of cheap Android Intel tablets as they are not going to have them in the market. According to Bernstein Research analyst Stacy Rasgon, the subsidies amount to about $51 per tablet, which is quite a gift considering that these slabs sell for $199 or less. Rasgon says that for 2014, Intel will be selling chips to these tablet manufacturers at above costs, with its margins close to zero. Morgan Stanley analyst Joseph Moore recently assessed, While we do expect that [Intel] phasing out tablet subsidies over the course of 2015 will cause modest reduction in losses, it could also blunt the company’s momentum in tablets significantly.