Intel Corp. confirmed once again that netbooks are taking market share away from fully-fledged notebooks, a trend that should potentially threat makers of personal computers and components for them. However, Intel does enjoy this cannibalization since its Atom processors bring the company higher profits compared to previous-gen Celeron chips.

“We have seen some cannibalization of Celeron by Atom. […] Netbook sales were about 16% of all notebook sales globally, and a little higher in western Europe. […] Intel’s profit margins for Atom [are higher than those for the Celeron],” said Christian Morales, chief of sales at Intel Europe, in an interview with Reuters news-agency.

Intel Celeron and Celeron M central processing units typically offer higher performance compared to Intel Atom processors, but since Intel produces its Celeron chips using 65nm fabrication process, whereas Atom chips are made using more advanced 45nm technology. As a result, Atom processors are much more cheaper to make compared to Celeron due to smaller die size as well as more sophisticated manufacturing process.

But the Atom-based netbooks also utilize lower-cost chipsets as well as lower-cost screens and other components. As a result, while Intel may enjoy the growth of netbook popularity, actual manufacturers of those machines may not be that optimistic. While netbooks are good for current economic environment, in the long-term they are likely to negatively affect overall profit margins.

Tags: Intel