Allwinner Shakes Up Mobile Chip Industry With $5 64-Bit Chip

Allwinner recently announced a new quad-core chip for tablets, called the Allwinner A64, that's not only based on the latest 64-bit ARMv8 architecture but also comes with a very low price point of only $5. The new chip is based on ARM's Cortex A53 CPU and has support for h.264 and h.265 codecs, 4k video streaming, and the latest Android 5.0 operating system.

If Allwinner can forge the right partnerships with OEMs, the chip could pose a threat not just to other ARM chip makers such as Qualcomm or Mediatek, but also to Intel, which is still struggling to turn a profit in mobile.

Intel hopes that if it can get Chinese chip makers such as Rockchip and Spreadtrum to build less expensive 28nm Atom-based chips, then it can increase Atom's market share and will later be able to increase its price, as well. However, with companies such as Allwinner that keep dragging the prices down for mobile chips while also raising performance, both parts of Intel's plan could face difficulties.

In the first case, if Rockchip and Spreadtrum can't match Allwinner or other chip makers willing to sell ARM chips for such a low price, then Atom won't be able to increase its popularity anyway.

Assuming the first part of Intel's plan does succeed, and Rockchip and Spreadtrum can make Atom chips that are competitive on price and performance, that still doesn't mean Intel itself will be able to start selling Atom chips at a premium. Companies such as Allwinner, and to a lesser degree Mediatek and Qualcomm, will continue to put pressure on mobile chip pricing. They could make it difficult for Intel to turn a significant profit for the next few years.

Allwinner's $5 ARMv8 chip doesn't just put pressure on Intel, though. Intel will just be the one hit the hardest by it, because the company is already in a position where it doesn't make a profit. Companies such as Mediatek and Qualcomm do make profits, even at the low-end of the market. However, all of them will use essentially the same ARM CPUs in their chips, and there could be OEM customers that will simply go with the lower-cost variant.

Allwinner's $5 quad-core 64-bit chip should make possible the creation of mobile devices that cost as low as $50, come with Lollipop out of the box, and deliver surprisingly good performance for the price -- all while encouraging competitors to lower their prices, as well.

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