Allwinner has announced a new quad-core chip for tablets based on the 64-bit ARMv8 architecture, which supports Android 5.0, 4K video, as well as other features that are to be expected from one of the leading chipmakers in the mobile market. What is less expected is the price at US$5.

That price point means that Allwinner has adopted a strategy to grab significant share in the market quickly, especially for lower-end tablets. This price point means that it is now conceivable for mobile devices to be sold within the price range of US$50-60, run the latest version of Android, and process video well enough for a low-end device with surprisingly good performance.

One of the interesting strategic aspects of this is that while Qualcomm and MediaTek can probably match the price without completely losing their position, Intel will likely have to dip into its finances even more than it has in the past. After a year in which Intel lost about US$4 billion trying to break into the mobile space without becoming a market leader, Allwinner’s move may mean that Intel will have even more red ink on its balance sheet; Intel is already speculated to be selling its chips below cost in order to build market share.

In addition, since MediaTek and Qualcomm have increasingly used ARM reference designs to produce their chips, especially at the low end, the move by Allwinner could chip away at their dominance. If the chips are all essentially the same, the differentiating factors are distribution strength, service and price.