QUOTE AND NEWS
TheStreet.com  5 hrs ago  Comment 
Updated with Thursday share prices. NEW YORK (TheStreet) -- The wild stock market swings that have bruised many leading tech stocks in the last week have fueled a growing debate around whether the sector can regain the momentum that has made it...
TechCrunch  8 hrs ago  Comment 
 A second Chinese drone startup has disclosed major funding this week. Intel announced it put $60 million into Shanghai-based Yuneec, just two days after rival EHANG publicized a $42 million Series B. Read More
SeekingAlpha  Aug 26  Comment 
Forbes  Aug 26  Comment 
At Intel's developer conference last week, CEO Brian Krzanich announced that it's working with Google's Project Tango to bring depth sensing capabilities to Android phones. An onstage demo showed how the phone equipped with Intel's RealSense...
BBC News  Aug 25  Comment 
Is your body the next frontier for the chip giant?
Forbes  Aug 25  Comment 
The annual Intel Developer Forum held in San Fransisco last week underlined Intel?s increasing focus on Internet-of-Things (IoT) and wearable technology. For years, the leading PC microprocessor company has used IDF as a platform to update...
Automotive World  Aug 25  Comment 
Intel and BlueData Collaborate to Simplify Big Data Infrastructure Intel Corporation and BlueData today announced a broad strategic technology and business collaboration, as well as an additional equity investment in BlueData from Intel Capital....
Market Intelligence Center  Aug 25  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Intel Corp (INTC). Look at the Nov. '15 $26.00 covered call for a net debit in the $24.47 area. This trade has a duration of 87 days. The...




 


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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