In an interview with Barron’s, Smith also confirmed the chipmaker is working on custom chips for cloud vendors. He said Intel is “well into the semi-custom product” and will be in the custom server chip space within a year or so.

PC market is alive and kicking

Smith told Barron’s that Intel is operating on the assumption of a flat PC market, relatively strong in mature markets, and weak in emerging markets.

Smith added that the PC market is a “fascinating place” right now, as there is a lot of innovation both in high-end and low-end products. He described new Broadwell products as “phenomenal devices” and said upcoming Skylake products will offer all-day battery life and spectacular performance.

On the opposite side of the spectrum, Smith talked up Bay Trail products, which enabled the creation of sub-$250 notebooks with adequate performance.

Intel’s tablet strategy

Smith said Intel experienced a lot of growth in the tablet market last year, but mainly because it was starting from a very low volume.

“We started 2014 with zero share, we ended the year exceeding the 40 million-unit target we set,” said Smith.

Smith also questioned the dynamics of the tablet market. Recent market research suggests growth is slowing down rapidly and product maturity is one of the factors behind the slowdown.

“There’s not a huge difference between the capability that you get today versus a tablet that’s 18 months old — versus, I have a PC that’s four years old, heavy, relatively short battery life, relatively underperforming, with something that’s modern, so a lot of performance, a much-improved battery life, and touch-enabled screen, for example, that we’re seeing this share of wallet shift back toward PCs in 2014 relative to tablets,” Smith told Barron’s.

Smith said Intel is losing a lot of money in the tablet segment and now wants to make the tablet business profitable.

Chinese smartphone market ripens

Smith said Intel is still a relatively small player in the smartphone space, despite the fact that it has compelling architectures.

He specifically mentioned China as an “interesting and huge” market, targeted by Intel’s recent investments in Spreadtrum. Intel also teamed up with tablet-centric Rockchip in May 2014. 

“I think Spreadtrum is being set up to be a key player in China. Yeah, I think that could be a meaningful market over time, and the Chinese market is the largest phone market on the planet,” said Smith.

Smith said Intel can work with a lot of different players and allow them to innovate on Intel’s architecture.

Two months ago Intel CEO Brian Krzanich said he expects the company’s new chip partners in China to drop ARM and migrate to x86 over the next few years.