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 Intel, Inc. (NYSE:INTC) is the world's leading semiconductor producer and has been the industry leader since the inception of the personal computer. Intel produces products for many facets of advanced technology including flash memory products, motherboards, wired and wireless connectivity products and networked storage products. Since the 1980s Intel has seen growing competition from a number of companies but none more significant than Advanced Micro Devices (AMD). While Intel still holds the majority market share AMD has seen major gains over the last decade. With the release of a new product line in late 2006 and early 2007 Intel has re-established its technological lead over the AMD. Its new technology (advancing from 65nm process technology to 45nm process technology) is roughly six months ahead of AMD's in terms of product cycle. Intel has also released its new Centrino 2 processor that was previously codenamed "Montevina". The processor is aimed at enabling greater work capacity, wireless performance, and battery life.
[edit] HistoryRobert Noyce and Gordon Moore founded Intel, Inc. in Santa Clara, California in 1968. Intel began as an engineering and technology company and developed the first microprocessor chip in 1971. Upon the invention of the personal computer (PC) microprocessors became Intel's main business. Intel has always enjoyed the largest market share in the industry and only began facing competition in the 1980s. Since it was founded Intel has always been on the cutting edge of microprocessing technology. [edit] Business Segments
  [edit] Process Technology and Architecture
[edit] Performance MetricsMicroprocessors are rated on a number of characteristics that measure their performance. These measurements are the most important factors for determining the success of a specific line of products and as such are the focusing points for creators of these chips. Some lines of chips will focus more on one factor than another in an attempt to predict what the market prefers (i.e. faster chips, or more energy efficient chips, etc.)
[edit] Products & CustomersIntel's product line is made up of many different computing components including microprocessors, flash memory, motherboards, wired and wireless connectivity products, communications infrastructure components, and products for networked storage. Intel has released its latest line of processors, called the Cloverton processor. The Cloverton is a quad-core processor, a jump in microprocessing technology that is about six months ahead of AMD's technology. Intel expects its new quad-core processors to make up 75% of its server mix by the end of 2007. Intel sells its products to a number of different types of customers:
[edit] Competition, antitrust and espionageTemplate:See also Two factors combined to end this dominance: the slowing of PC demand growth beginning in 2000 and the rise of the low cost PC. By the end of the 1990s, microprocessor performance had outstripped software demand for that CPU power. Aside from high-end server systems and software, demand for which dropped with the end of the "dot-com bubble", consumer systems ran effectively on increasingly low-cost systems after 2000. Intel's strategy of producing ever-more-powerful processors and obsoleting their predecessors stumbled, leaving an opportunity for rapid gains by competitors, notably AMD. This in turn lowered the profitability of the processor line and ended an era of unprecedented dominance of the PC hardware by Intel.[citation needed] [edit] Trends and Forces[edit] Semiconductor CyclicalityThe semiconductor industry is deeply cyclical. Demand in up cycles is so high that chip manufacturers have trouble keeping up. Similarly, if electronic sales, particularly PC sales, are slow, demand for chips can plummet. The fact that the semiconductor industry is more subject to the whim of consumer demand more than corporate demand, also adds to the overall volatility. The backdrop of this high market volatility, however, has been continual growth. Over the last 20 years the semiconductor industry has seen about a 13% average annual growth rate. Semiconductor sales have shown about an 80% correlation with GDP growth trends, meaning a downturn in GDP growth could very likely be accompanied by a downturn in semiconductor sales. [edit] Declining Computer DemandThe growth of demand for personal computers has slowed since the 1990s. As a result, Intel's growth has slowed as well. The demand for the products that use Intel's microprocessors is very much a determinant of Intel's success. Unfortunately this factor is out of Intel's control. Continuing to increase the productivity and applications of their products through research and design is necessary for Intel to remain on top of the microprocessor industry. [edit] Cost-Minimizatin EffortsIn September 2006 Intel released restructuring plans that, if effective, would significantly cut costs of production. The effect of these efforts have begun to be realized in 2007 third quarter earnings with a 23% increase of gross margin from third quarter 2006. [edit] Innovation FocusIntel spends significantly more on research and design than AMD in an effort to remain on the cutting edge of the technology field. Intel has introduced the world's first 45nm microprocessor which boasts smaller size and greater power than the previous 65nm microprocessors. Making the transition to 45nm could face execution difficulties such as product defects. [edit] Trying to Enter the Mobile Phone MarketIntel unvelied its Atom microprocessor in April, 2008 as the company anticipated the launch of mobile internet devices from some PC makers. However, Intel now plans to use the second generation of the chip, expected to release in 2009, for smart phones. There is a growing trend of mobile phones with internet access such as the iPhone and the BlackBerry. An analyst from FTN Midwest, also noted that the Atom processor is believed to be the chip that will be used in the next iPhone (the one after the new 3G iPhone).[1] Intel plans to use its atom microprocessors as well as the 4G service WiMax, to enter into this expanding business. Intel will use the WiMax network that is being built through a seven company joint venture headed by Sprint and Clearwire. Intel has tried to make a move into the mobile phone market before with its XScale division, but ended up selling it off in 2006.[2]
[edit] Antitrust InvestigationsAn official investigation of Intel concerning possible antitrust violations has been undertaken by the Federal Trade Commision. The investigation will look specifically into whether or not Intel has practiced anticompetitive conduct. AMD stated that they believe that Intel gives rebates to some of the larger PC makers that allows the PC makers to purchase Intel's processors below production cost. The Korean Fair Trade Commission agrees with this claim as they fined Intel $25M after finding that Intel gave out $37 M in rebates to Samsung Electronics and Trigem Company in return for promising not to buy microprocessors from AMD. Intel contested that they do not give out rebates, but rather offer volume based discounts.[3] [edit] CompetitionThe microprocessor industry is essentially evolving into an unbalanced duopoly. Intel competes directly with Advanced Micro Devices (AMD). While Intel still enjoys a significant advantage in market share, AMD has been gaining ground in the industry. AMD is one of the main focuses for Intel in 2007. They're agenda hopes to pressure AMD into a retreat, then subsequently generate significant growth in 2008 with innovative product releases. Intel views AMD's current spending (which is very high) as irrational and unsustainable. This strategy has led AMD to cut prices and lose ground in market share for 2007. Below are the recent breakdowns for market shares among the different divisions of the microprocessing industry.  Intel's release of new products in 2006 and into early 2007 has shown advances on technology that AMD has not yet been able to achieve. The release of the quad-core processors for the mainstream has raised the bar for performance in the industry. Intel has also made breakthroughs in microprocessing technology with the release of its 45nm process technology, an advance where AMD is lagging. The second half of 2006 and early parts of 2007 were periods in which Intel improved its position as the leader in the microprocessing industry. However, Intel has had a couple of missteps in early 2008 which could help out AMD. Intel's next generation Centrino processor had a problem with FCC certification which will delay its availability in the US. In addition, there are issues with the graphics in Intel's Montevina notebook platform. AMD is capitalizing on Intel's graphics issues with its new notebook platform known as Puma. The platform features unviversal compatibility, from low end to high end notebooks. It also boasts high end graphics that Intel's platform does not deliver.[4] In the Graphics industry, the major competitors are Nvidia and AMD (ATI). These competitors are striving to break into the mainstream computation market, currently satisfied by Intel and AMD's CPUs by facilitating the use of their graphical processor units (GPUs) for use in some non-graphical tasks. They are particularly effective in tasks which can be performed in parallel. However programming tasks to be processed in a parallel manner is non-intuitive to the traditional programmer, so is proving difficult to gain momentum. Nonetheless, the impressive price/performance advantages such 'mis-use' of GPUs provide may cause some concern to Intel in some specialist sectors in the next couple of years.
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