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For Chip Makers, the Next Battle Is in Smartphones

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A Taiwan Semiconductor Manufacturing plant

Taiwan Semiconductor Manufacturing Company, via Reuters

The going rate for a state-of-the-art chip factory is about $3 billion. The plants typically take years to build. And the microscopic size of chip circuitry requires engineering that practically defies the laws of physics.

Over the decades, legions of companies have found themselves reeling, even wiped out financially, from trying to produce some of the most complex objects made by humans for the lowest possible price.

Now, the chip wars are about to become even more bloody. In this next phase, the manufacturers will be fighting to supply the silicon for one of the fastest-growing segments of computing: smartphones, tiny laptops and tablet-style devices.

The fight pits several big chip companies — each trying to put its own stamp on the same basic design for mobile chips — against Intel, the dominant maker of PC chips, which is using an entirely different design to enter a market segment in which it has a minuscule presence.

Consumers are likely to benefit from the battle, which should increase competition and innovation, according to industry players. But it will be costly to the chip manufacturers involved.

“I worry about that,” said Ian Drew, an executive vice president at ARM Holdings, which owns the rights to the core chip design used in most smartphones and licenses that technology to manufacturers. “But ultimately, these chip makers are all pushing each other, and if one falls over, there are still two or three left.”

From The New York Times
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