In the heyday of muscle cars, everyone knew what engine was under the hood. Horsepower sold a car. Today no one even looks under the hood. Electronics are undergoing a similar shift in focus. CPUs are less important and modems, connectivity, displays, cameras, and battery life have been elevated in importance [...] There are $4 ARM based CPUs from Asian vendors using turnkey ARM designs. High-end smartphone and tablet OEMs design their own SoCs with ARM cores. ARM has effectively commoditized the CPU market in phones and tablets. In the smartphone market, the dominant CPU is ARM and not Intel. Similarly, in the PC market, the dominant CPU is Intel and not ARM and this is also unlikely to change. However, the world has moved into the post-PC era and that is slowly grinding down Intel’s market position. The PC client business is still 63% of revenue last quarter and Intel has not demonstrated that it can offset the stagnation in the PC market. The commodity nature of CPUs is likely to drive a mix shift to the low end. We believe that Silvermont is a very capable CPU that has low power and good performance. It also can run Windows well. We think that it is likely to cannibalize higher-end notebook sales more than other tablet sales. Thus, we think it drives a small net gain in unit sales, but it significantly reduces Intel’s revenue per box. We estimate that a system that uses a Silvermont processor will generate 1/5 to 1/2 the revenue for Intel than a Haswell processor. We think that this is the consequence of CPUs being ‘good enough’ and devices no longer driven by CPU performance. Moreover, we believe that the mobile and PC ecosystem are separate and distinct. For consumers that just want a tablet experience as they exist today, they are more likely to buy an iPad or other ARM-based competitor. Consumers that want a PC experience (Windows) are likely to purchase a Silvermont-based machine.