QUOTE AND NEWS
SeekingAlpha  3 hrs ago  Comment 
By Jonathan Weber: Intel's (NASDAQ:INTC) shares are up 33% over the last quarter, 41% over the last six months and an astonishing 62% up over the last year. The company's dividend yields at 2.6%. Nevertheless the company's shares are not...
SeekingAlpha  5 hrs ago  Comment 
By Options Calling: Intel is the world's largest merchant of PC and server processors. Despite Intel (NASDAQ:INTC) being one of the most successful technology companies in the world, it has suffered from a slowdown in the PC market over the last...
Cloud Computing  7 hrs ago  Comment 
Intel Corporation and Unity Technologies today announced a strategic collaboration to advance the development of Android*-based applications on Intel® architecture. The agreement accelerates Intel’s mobility push as...
Jutia Group  8 hrs ago  Comment 
[at TheStreet] - RBC Capital Markets analyst Doug Freedman says Intel can pay around $27 billion to buy wireless chipmaker MediaTek. Read more on this. Intel Corporation (INTC), with a current market cap of $170.13B, started trading this morning...
TheStreet.com  8 hrs ago  Comment 
NEW YORK (TheStreet) -- RBC Capital Markets analyst Doug Freedman says Intel can pay around $27 billion to buy wireless chipmaker MediaTek, in a deal that would benefit the company's earnings while stemming investment losses it is incurring to...
SeekingAlpha  12 hrs ago  Comment 
By Orange Peel Investments: Meg Whitman's Hewlett-Packard (NYSE:HPQ) is set to report today after the market closes. As companies like Intel (NASDAQ:INTC) have caught some confidence under the pretense that the market for PC computers has...
SeekingAlpha  Aug 20  Comment 
By BB Research: Intel (NASDAQ:INTC) is planning to apply Big Data into medicine. Recently, Intel and the Michael J. Fox Foundation have joined hands to pair smartwatches with Intel's analytics software for collecting data from sufferers of...
Cloud Computing  Aug 20  Comment 
SAN JOSE, Calif. , Aug. 20, 2014 /PRNewswire-iReach/ -- A case study from Intel and UCSD highlights the transformative collaboration between the school's bioengineering department and the Intel® Internet of Things (IoT).  As part of the...
SeekingAlpha  Aug 19  Comment 
By Alex Cho: AMD (NYSE:AMD) continues to lose the standard PC and GPU channel. While AMD has communicated that it's diversifying away from traditional markets, I question what other product categories AMD can pursue in which it generates...
SeekingAlpha  Aug 19  Comment 
By ColoradoWealthManagementFund: Intel (NASDAQ:INTC) has done fairly well since 2013 started, up 56.64% in a little more than 20 months. That's on top of paying out $1.575 per share in dividends resulting in a total yield of 64.09% over the period...




 


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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