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Intel reports its third quarter results today, and is expected to exceed analyst expectations and its own guidance. While this will mainly be a result of recovering notebook and server markets, growth in low power netbooks will also be a key factor.

Of course it would be serious if Intel did not report strong year-on-year growth, given that this quarter will be compared to the disastrous Q308. "This is the first quarter we have compared to the end of the world. They're comparing now to the beginning of a down year," Martin Reynolds, research fellow at Gartner, told Associated Press. "If they do well, it's a beginning, but I wouldn't expect to see us back to the roaring days of 2008.

But other more realistic indicators are expected to be strong too - for instance, despite concerns that netbooks will depress margins, most analysts believe Intel will report gross margins of at least 55% (the top end of the chip giant's guidance, issued in August, of 53%-55%), and probably better. As Intel refines manufacturing processes for the Atom low power processor family, and outsources some production to Taiwan, it says its margins on the chip will be buoyant despite its lower list price than the full power PC processors.

Craig Berger of FBR Capital Markets predicts that Intel will report Q3 revenue of between $9.7bn and $10.3bn, better than consensus analyst expectations of about $9.5bn and above Intel's own revised target of between $8.8bn and $9.2bn

With Atom one of Intel's key growth engines, as it pushes beyond netbooks into MIDs and smartphones, the biggest threat to its progress is ARM Holdings, whose processor architecture is used by most mobile chip players. A new research note on the UK-based firm says it is likely to outperform Intel over the next 2-3 years in netbooks, smartbooks and MIDs, as it continues to stay ahead in the low power race - but this could trigger a takeover bid.

This is the view of Didier Scemama, an analyst with ABN AMRO Bank. He speculates that ARM could be taken over by its key licensees - which include Qualcomm, Broadcom, Texas Instruments and Freescale in the mobile world - or at least a blocking holding taken, to prevent the firm falling into the hands of a single private equity investor or one chip player (though the latter option might be self-destructive, since the success of ARM's fight against Intel will rest largely on being multivendor and so achieving huge market share).

Scemama's note also raises the possibility of ARM being placed under the control of a non-profit foundation, somewhat like Symbian when it was owned by a group of handset makers (before being bought by Nokia and then put into open source). The note, as quoted in EETimes, reads: "First, we believe ARM processors will match Intel's performance while beating them on power consumption and possibly cost. Second, we expect PC manufacturers to switch from Intel/Microsoft OS-based platforms to ARM/Chrome OS-based platforms beginning in 2H10 to reduce their dependence on Intel and improve margins."

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