Intel (INTC +0.42%) is not a chip company that has, in recent years, been known as a "growth" company. Indeed, after seeing two years of rather robust growth in 2010 and 2011, the company actually saw revenues contract in 2012 and 2013.
Further, although Intel saw a nice boost in sales during 2014 as a result of strong data center growth as well as better-than-expected PC results, the company is on track to see revenues contract in 2015 as PC demand has been weaker than expected.
Given that the PC market, in general, isn't expected to grow for the foreseeable future and may even continue to contract in the coming years, Intel needs to look to other areas for growth. Here are three growth opportunities that I'm excited about as an Intel stockholder.
The network
At Intel's recent data center day, Sandra Rivera -- the executive in charge of the company's networking business -- gave an overview of its networking strategy.
Perhaps the most exciting part of this opportunity is the fact that Intel's share within the market is still relatively small (Intel says its share is about 7.5%) while the total addressable market is quite large at an estimated $18 billion.
Now, it's not always the case that a player with relatively low market share in a large market can reasonably be expected to grow share. After all, such a player could be under-funded and, frankly, outmatched relative to stronger peers.
That's not the case with Intel in networking, though. The company's share is relatively small, but Intel has indicated that its share of this market is growing and that it is investing heavily in this market, claiming that its networking-related research and development spend has doubled over the last two years.
In the coming years, I expect that with an increasingly competitive networking-oriented product portfolio (boosted by both organic efforts as well as the acquisition of the LSI's networking chip business as well as Mindspeed's wireless infrastructure business), Intel will experience solid growth in networking.
The Internet of Things
Another segment that looks particularly attractive for Intel is its opportunity in the Internet of Things market. At Intel's investor meeting last year, the head of the company's Internet of Things Group, Doug Davis, indicated that this business unit captured about 17% market share of its served addressable market.
I think that the Internet of Things story for Intel is very similar to the networking one: Intel has relatively low share in a fairly large and growing market. Given that Intel has made it clear that it is making significant investments in this market (in late 2013, Intel CFO Stacy Smith said that investments in this segment would increase by 20% relative to 2012 levels), it seems reasonable to expect that Intel should be able to gain share within what Intel claims is a growing total addressable market.
The mobile chip market (maybe)
A final potential growth avenue for the company is in the world of processors and related components aimed at ultra-mobile devices such as smartphones and tablets.
Although Intel has actually "put its money where its mouth is" with respect to mobile with substantial research and development investments (as well as with a fairly large "contra-revenue" program to try to shoehorn expensive platforms into inexpensive tablets), it still hasn't succeeded in becoming a strong competitor to the incumbent vendors in this market.
If Intel can get its act together in mobile and demonstrate that it can, year-after-year, field competitive products, I think that the company could get a reasonable portion of the quite large market for mobile chips.
If Intel can generate enough revenue from mobile processors to ultimately get its mobile group to profitability, I'd call that a win.
