Asustek said to be adopting Qualcomm solution for new ZenFone

ASUS CEO Jerry Shen with Zenfone 1st Gen

Via Digitimes.com In addition to CPUs from Intel, Asustek Computer is said to be planning to develop second-generation ZenFone smartphones using Qualcomm's solutions for 2015, according to sources from smartphone component makers, which added that Asustek is possibility looking to push Intel to cut prices on its third-generation platform.

Asustek declined to comment about the news, while Intel pointed out that it will continue to provide subsidies to partners to help them cut costs.

Asustek is planning to showcase second-generation ZenFone smartphones at CES 2015 in January 2015, but whether the company will also reveal the models using Qualcomm solutions is still unknown.

Asustek CEO Jerry Shen stated at a recently investor meeting that Asustek's ZenFone series will all adopt Intel's platform prior to the end of March 2015. However, in the second quarter of 2015, Asustek will add models using non-Intel solutions for the NT$4,990 (US$163) pricing range. Intel's platform will still account for 60% of Asustek's estimated 16 million smartphone shipments for 2015.

Some market watchers originally believed Asustek will use solutions from MediaTek for its second-generation ZenFone, but the sources pointed out that Asustek looks like it is approaching Qualcomm, a major competitor of Intel in the smartphone area for partnership. Qualcomm also has partnerships with Asustek over tablets, Padfone and ZenWatch.

Since Asustek is a major partner of Intel in the smartphone industry and Intel's platform has not been reported as having any shortages or defects, the sources believes Qualcomm's entry into Asustek's supply chain shows that Intel and Asustek negotiations include pricing issues.

Intel's cooperation with Spreadtrum and Rockchip as well as adjustments over marketing subsidies and product pricing also concern Asustek.

However, some market watchers believe that if Intel refuses to respond to the challenge from Asustek, the smartphone maker may put itself in a difficult situation since the Qualcomm platform has almost no cost advantage and Asustek is unlikely to receive extensive support from Qualcomm, as it is not one a major Qualcomm partner.