Intel (INTC -3.45%) is gearing up to retake its lost market share from the likes of AMD (AMD +0.22%). It recently announced new graphics processing units (GPUs) and will be spending heavily in the coming years to expand its chip manufacturing capacity. But can Intel stock become a market outperformer again? In this Motley Fool Live segment from "Semiconductor Revolution" recorded on Jan. 6, Fool.com contributors Billy Duberstein, Nicholas Rossolillo, and Jose Najarro talk about the battle that lies ahead.
Billy Duberstein: It [Intel] has a new CEO with a new plan. These things will take time, especially because he wants Intel to be a fab [factory] for other companies. It can take several years to build one of these fabs that they're going about now. Like I said, it might be a little bit early, but definitely interesting with the introduction of the GPU that they're going to try to go toe-to-toe with AMD. It will be pretty interesting to see.
Nicholas Rossolillo: I'm in wait-and-see mode on Intel. I have my doubts. Falling behind on the technology curve is hard. It's hard to come back from. The one issue that I take with Intel's strategy is it's not a fair comparison because AMD was a tiny company, but when they got into a ton of trouble during the financial crisis, they basically picked between their chip design business and their manufacturing business, because they used to be like Intel. They used to mirror Intel a lot more closely than they do now because they did both. They designed, and they had fabs.
The company that we now know as GlobalFoundries (GFS +4.14%), that used to be part of AMD. They spun it off, and they focused completely on just chip design. That's how they caught up to and now have started eating Intel's market share. Intel is a different story because it's huge. It's starting from a different place. It's not a tiny company. It's still the world's largest semiconductor company by revenue. It's huge. It's over $70 billion a year or almost, excuse me, almost $80 billion per year in revenue. It's massive. It's going to be a really, really difficult thing to get that ship, that massive ship turning in the right direction.
I have my doubts that if they do turn it around, I think long term, it will just be an industry performer. It won't outperform. I think there might be a spike for a few years. Maybe it outperforms the industry when it gets things right, and then just like industry-performs after that. If you're looking for growth, all-out growth, I'm not buying it. Maybe I'll be wrong. But like Billy said, if you want a cheap dividend stock, Intel might be your ticket.
Jose Najarro: You mentioned a great point there, Nick: how AMD and Intel both starting in different places. AMD, for example, to get into all these laptops and desktops and OEMs [original equipment manufacturers]. It had to really work its butt off to make great relations with these companies. To some extent, that might be a strength or weakness to Intel, where now they have this new graphics card. They already have great partnerships because of their processors with all these OEMs. To some extent, they could probably heavy-hand that: "Hey, for you to really get our processors, maybe you should really take a look at some of our graphics cards as well to incorporate." Might be to some strength, but if at the end of the day, if the product doesn't do as well, the customer and the market decides if that's something that they should continue.
Billy Duberstein: You're going to have to pick the AMD ecosystem or the Intel ecosystem. It's going to be more even, I think, going forward. But it's coming from a place where Intel was 90, and AMD was 10. Now, it's going to be probably closer to 50-50 for a while. We'll see if Intel can get its act together over the next few years. It's hard to come back from falling behind in technology. But the new CEO is attracting a lot of talent. They certainly have the financial means to invest a lot in R&D, so it'll be interesting to watch.
