QUOTE AND NEWS
SeekingAlpha  1 hr ago  Comment 
By Michael Blair: Apple's (NASDAQ:AAPL) new iPhones have a lot of new features. New to Apple, that is. They have been de rigeur in the Android world for quite a while. If Apple keeps up the pace of innovation, it could catch up to Android in a few...
SeekingAlpha  5 hrs ago  Comment 
By Alex Cho: While Qualcomm (NASDAQ:QCOM) has been a good holding for tech investors who wanted exposure to mobile, I think now is a good time to part ways with Qualcomm. The truth is, there's very little Qualcomm can do to drive growth other than...
SeekingAlpha  Sep 14  Comment 
By Bruce Burnworth: My last article regarding Intel (NASDAQ:INTC) from the floor of Intel Developer Forum 2014 September 9-11 described some of the strategies and accomplishments of Intel that take it far beyond a PC company that has a decent...
SeekingAlpha  Sep 12  Comment 
By Sean Chandler: The situation is tough. In its PC business, AMD (NYSE:AMD) desperately marches on with its insufficient Bulldozer architecture in hopes to reach another day. Rory Read says that there are bumps ahead of the chipmaker, and I...
Motley Fool  Sep 12  Comment 
Intel will release MICA, a $1,000 luxury smart bracelet, next year. But is there a viable market for high-end wearable devices?
SeekingAlpha  Sep 12  Comment 
By Stan Stafford: Overview In this article I will be reviewing the three stocks in the Dow Jones Industrial Average that have performed the best year to date. The stocks being reviewed are: Intel (NASDAQ:INTC) - 34.93% increase YTD ...
CNNMoney.com  Sep 12  Comment 
Read full story for latest details.
TheStreet.com  Sep 12  Comment 
NEW YORK (TheStreet) --aIntel declared a quarterly dividend of 22.5 cents a share on Friday. Shares of the chipmaker were falling 0.4% to $34.87 in morning trading. The quarterly dividend is in line with Intel's previous dividend. The new...
Jutia Group  Sep 12  Comment 
[Business Wire] - Intel Corporation's board of directors has declared a quarterly dividend of 22.5 cents per share on the company's common stock. The dividend will be payable on Dec. Read more on this. Intel Corporation (INTC), valued at...
SeekingAlpha  Sep 12  Comment 
By Alcaraz Research: Intel (NASDAQ:INTC) did not win the contract to supply the processor inside the BlackPhone. The high-margin secure phone from Silent Circle would have contributed a decent amount of money to help reduce the operating losses of...




 


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). Intel has been in the industry longer than AMD and, with around 70%+ market share, maintains a significant lead over its smaller rival.[1] Intel's higher net income allows it to outspend AMD on R&D. Such high R&D funding has allowed Intel to maintain its leadership position in the semiconductor industry.[2]

Company Overview

Robert 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.

Business Segments

Intel sells its products to a number of different types of customers:

  • Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs) are customers who produce computers, handheld devices, and telecommunications and network communications products. The products that these manufacturers produce rely on the processors and other products that Intel makes.
  • PC and network communications product users are customers (individuals, small and large businesses, etc.) that buy Intel's products through distributors, resellers and retailers across the world.
  • Other manufacturers including producers of a broad spectrum of industrial and communications equipment also have significant for Intel's products.

Digital Enterprise Group (DEG)

This group manufactures products that are incorporated into desktop and laptop computers, enterprise computing servers and workstations, a broad range of embedded applications, and other products. DEG’s products include microprocessors and related chipsets and motherboards designed for the various computers mentioned. The growth in the mobile industry has affected this group's revenue generation, reducing the percentage contribution to the company as a whole.[3]

Mobility Group

This group manufactures and produces processors for notebook computers and all other mobile devices. Recently the mobility group has been increasing its percentage of total revenue.[4]

Others

Digital Health Group

Focused on providing technology for all aspects of the health care field. While no specific products have come out of this division to date, their goal is integrate technology into health care research, diagnostics and productivity, and personal health care.

Digital Home Group

Makes Intel products available around the world to third party distributors, dealers, system integrators and solution providers. Furthermore, this group designs products to meet local needs around the world.

NAND Solutions Group

Produces all of Intel's flash memory products for both embedded and wireless markets. This group includes the NAND flash memory products that are produced in Intel's joint venture with Micron. This joint venture has launched a high speed NAND flash memory technology that supposedly is five times faster than conventional NAND.

R&D Model

Intel's current development model, known as the "tic toc model", calls for the introduction of a new process technology every odd year, then a move towards a new architecture during each even year.

Business Growth

FY 2010 (ended December 31, 2010)[5]

  • Net revenue increased 24.1% to $43.6 billion.
  • Net income increased 16122% to $11.5 billion DOLLARS

Trends and Forces

Semiconductor Cyclicality

The 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.

Innovation Focus

Intel 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 has been extremely successful for Intel and they are now poised to transition to 32nm technology microprocessors.

Intel's innovative approach has also led to investments outside of the United States. For example, Intel has been making clean-tech investments in China.[6]

Trying to Enter the Mobile Phone Market

Intel has its Atom microprocessor for smart phones. There is a growing trend of mobile phones with internet access such as the iPhone, Android and BlackBerry. 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. [7]

Competition

Intel is a large corporation with multiple divisions that compete with a variety of companies for customers. The table below highlights the major competitors identified for each division.

Microprocessors[8]
DesktopAMD
VIA
MobileAMD
VIA
EnterpriseAMD
IBM
Sun Microsystems (Now Oracle)
EmbeddedAMD
VIA
Freescale Semiconductor,Inc.
Chipsets[9]
AMD
NVIDIA
VIA
Flash Memory[9]
Hynix Semiconductor Inc.
Micron
Samsung Electronics Co. Ltd.
SanDisk Corp.
Spansion Inc.,
Toshiba
Connectivity[9]
Atheros Communications, Inc.
Broadcom
QUALCOMM

The 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.


References

  1. AMD narrows market share gap with Intel, revenue gap grows (07-02-2008). Retrieved on 2009-06-03.
  2. ftp://public.dhe.ibm.com/annualreport/2010/2010_ibm_annual.pdf Intel, "2010 Annual Report"]
  3. INTC 2008 10-K pg. 4  
  4. INTC 2008 10-K pg. 6  
  5. INTC 2010 10-K pg. 23  
  6. http://www.usatoday.com/tech/science/environment/2008-10-28-intel-solar_N.htm?csp=34
  7. Intel to Re-enter the Mobile Phone Market.
  8. INTC 2008 10-K pg. 11  
  9. 9.0 9.1 9.2 INTC 2008 10-K pg. 12  
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