Intel Just Pulled Ahead in This Key Market

Chip giant Intel (INTC) has faced multiple challenges in its PC CPU business over the past year. For starters, the rebound in PC demand following the post-pandemic crash has been a disappointment. Global PC shipments edged up just 1% in 2024, according to IDC. While overall demand for PCs is mostly out of Intel's control, the company has made some mistakes as well. First, Intel's last generation Raptor Lake CPUs suffered from well-documented stability issues, forcing the company to extend warranties as it defended its reputation. Second, the desktop version of Arrow Lake, which succeeded Raptor Lake, struggled with gaming performance and received mixed reviews. Rival AMD has pointed to the disappointing Arrow Lake launch as one driver behind strong demand for its own CPUs. The story has been brighter in the laptop CPU market. Lunar Lake, Intel's one-off family of low-power laptop CPUs with built-in memory, delivered exceptional battery life just as Qualcomm was entering the market with its Arm-based chips. Lunar Lake won't win any awards for raw performance, but it's well suited for ultra-thin laptops with all-day battery life. Another win in the laptop market Given the lackluster launch of Arrow Lake in the desktop CPU market, expectations likely weren't all that high for the laptop variant of the Arrow Lake family. However, Intel has seemingly pulled a rabbit out of its hat. Reviews for the Core Ultra 9 285H, the laptop version of the flagship Arrow Lake chip, have been far more positive, with the only downside being weak AI performance. Reviewers at XDA called the new laptop chip "Arrow Lake's redemption arc." Regardless of whether it's plugged in or running on battery, the tested laptop powered by the 285H beat the AMD alternative in both single-threaded and multi-threaded performance. Intel's chip also came out on top in gaming benchmarks thanks to its powerful integrated graphics. The reviewers also noted that battery life was impressive, an indication that Intel has made significant progress on the efficiency front. Where Arrow Lake falls short is AI performance. Intel opted to include an underpowered AI processor which is easily beaten by the latest CPUs from AMD and Qualcomm. However, it's important to remember that most users probably won't care. The features that Microsoft reserved for Copilot+ branded PCs, which require more AI juice than Arrow Lake offers, were called "a bad joke" by Tom's Hardware. On-device AI will become more useful and powerful over time, but the current crop of AI PCs just aren't all that capable. Clawing back market share Intel's client computing segment suffered a 9% revenue decline in the fourth quarter of 2024 and managed a meager 4% increase for the full year. The company has been losing market share to AMD, and in the desktop PC market, that trend will likely continue. In the laptop CPU market, Intel is now in a position to win back some market share. Arrow Lake is exactly the product Intel needed. The 285H is fast and efficient, and it excels in gaming unlike its desktop counterpart. The company is putting AI on the backburner for now, but that's unlikely to matter to very many consumers. Intel is planning to follow up Arrow Lake with Panther Lake later this year. Panther Lake is expected to be a laptop-only CPU family, and it will be mostly manufactured using Intel's upcoming Intel 18A manufacturing process. If Intel can get Panther Lake out the door less than a year after the Arrow Lake laptop launch, the company can extend its new lead in the laptop CPU market. Intel's competitive positioning in the desktop CPU market likely won't change until the planned 2026 launch of Nova Lake. In the laptop CPU market, though, Intel is back on top.