Intel (NASDAQ: INTC ) has long claimed that its manufacturing edge will carry the weight of its mobile ambitions. In theory, this could help Intel increase its mobile market share, but investors are overlooking how this may not translate into improved results. In the video below, Fool contributor Steve Heller and analyst Rex Moore discuss why Intel could be dead money over the long term and what other factors are currently plaguing the semiconductor industry.
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.
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Report this Comment On May 13, 2013, at 11:04 PM, stretcho44 wrote:
Steve,
Don't worry about your position in Intel. It is fine and their is plenty of growth. Your facts and logic are fine as far as they go. You forgot a number of issues that will make your Intel investment pay off.
1. IDC has forecast slow growth in PC volumes and revenues through 2016. The 2013 volumes will be above the 2012 totals. Most corporate users will upgrade to Haswell based Ultrabooks because of the power savings and the additional security designed into the systems. Windows XP will be ending support next year and the 40% of the PC's in the market will required upgrading and not just the OS.
2. Your $10bil worth of Intel mobile market is incremental and on top of the Intel position in in the PC market. Your computation of the market size is very conservative and Intel will do better than your $10bil number.
3. Your statement about the number of chips INCREASING is wrong if you are talking about providing the same functions. Intel is integrating at a faster pace than QCOM. There may be more chips but that would only be because there is more functions being added to the device.
4. Note that if you extract just the QCOM revenue derived from their licensing and assume 100% gross margin, what is left of QCOM is operating with a negative profit. Outside QCOM licensing, they are operating a break even or a net loss.
5. IDC/Gartner have forecast an 8.5% CAGR for the high performance computer (HPC) market size through 2020 until it is projected to be $47bil. A very large percentage of the HPC systems are comprised of the COMPUTING SILICON. Intel will take more than its fair share of that market.
6. Intel cost/power/performance is nearly two generation steps ahead of TSMC, the leading foundry. Intel has been shipping 22nm and Trigate devices for over a 1.5 years. Both the 22nm shrink and the 3-dimensional transistors reduce the Intel cost to manufacture devices.
Don't worry Steve, Intel will do fine by you and those who have a position today.
Report this Comment On May 13, 2013, at 11:25 PM, stretcho44 wrote:
Steve,
This is a good read and may help you understand a little more why your ASP estimates were wrong and Intel revenues will not be a pessimistic as you expect.
If you have trouble understanding the implications of this technical article, please ask someone for help understanding what Gwenley is saying.
May 13, 2013, 7:10 P.M. ET
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Intel ‘Immune’ to Challenges of Moore’s Law, Says Microprocessor Report
http://blogs.barrons.com/techtraderdaily/2013/05/13/intel-im...
"Gwennap thinks companies making top-tier devices, such as Nvidia (NVDA), Broadcom (BRCM), and Qualcomm (QCOM), will be able to pass along the higher costs of more expensive transistors, while those selling into markets for cheaper devices may not be able to afford the most expensive process technology."
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