QUOTE AND NEWS
SeekingAlpha  9 hrs ago  Comment 
By Michael Blair: The latest Gartner estimates are in and paint an interesting picture. Device shipments have pretty well stalled with growth in 2014 of about 3% and not much more in 2015. While traditional PCs remain in a slow decline, Intel...
SeekingAlpha  Oct 17  Comment 
By Russ Fischer: Intel (NASDAQ:INTC) reported earnings earlier this week that were in-line with guidance. No surprises up or down. Accurate guidance is what the investment community expects form large stable companies such as Intel. A significant...
Agoracom  Oct 17  Comment 
Welcome to Beyond The Press Release, a production of AGORACOM in which we speak to Small Cap CEOs and executives about their recent press releases. With us today is Dr. Chris D’Couto President of Neah Power Systems. Neah Power Systems is a...
Forbes  Oct 17  Comment 
While Intel’s growth in Q3 2014 was mainly led by strong performance in the PC and the Data Center business, the company fared well in mobile and Internet-of-Things (IoT) segments as well, which promise to be an important part of its future...
SeekingAlpha  Oct 17  Comment 
By Terrier Investing: Intel (NASDAQ:INTC) continues to be the stock nobody wants to like, even when the facts are clear. The ARM and "death of the PC" narratives are tired and disproven by this point, but commentators continue to promulgate...
SeekingAlpha  Oct 17  Comment 
By Alex Cho: Intel (NASDAQ:INTC) reported a solid quarter, and next quarter guidance was pretty good. However, in a broader equity sell-off the stock hasn't held up under market turmoil. However, going into next year there are three notable...
MarketWatch  Oct 17  Comment 
Intel Corp. needs consumers to shop for PCs and notebooks this holiday season, and whether or not that is a reasonable expectation is a big question among investors in a changed tech landscape.
SeekingAlpha  Oct 17  Comment 
By Soid Ahmad: Advanced Micro Devices (NYSE:AMD) reported its third-quarter results today. The company posted revenue of $1.43 billion translating into a 1% decline sequentially and a 2.2% decline on a year-over-year basis. AMD missed the revenue...
SeekingAlpha  Oct 16  Comment 
By Trefis: Intel (NASDAQ:INTC) reported a strong Q3 2014, setting new records for revenue and earnings per share (EPS). The company has performed well so far in 2014, backed by a stabilizing PC market and its widening reach in new growth markets....
SeekingAlpha  Oct 16  Comment 
By WestEnd511: Intel (NASDAQ:INTC) reported Q3 EPS of $0.66 that beat consensus $0.65. Revenue of $14.55b also was above consensus of $14.45b thanks to market share gain from rival AMD and solid growth of the data center business. Given the recent...




 


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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