Arachnotronic
Lifer
- Mar 10, 2006
- 11,715
- 2,012
- 126
If anyone has more information about opportunities and potential problems Intel is facing, please share if there is public information to back up your statement.
I'll take a crack at this question, but I really hope you will use it as a basis for your own research rather than just taking it and using it in its entirety for your assignment...
Intel has historically been dependent on the personal computer market, a market that went into decline beginning in 2012 as tablets (and smartphones) became more capable and were able to take over many of the tasks that people previously required PCs for. The company has been working for years to diversify into new markets and to strengthen its position in existing ones, but with varying degrees of success.
One area that has been successful for Intel has been its Data Center Group, or DCG. DCG benefits from the fact that demand for cloud servers and networking infrastructure is growing quite rapidly, though that growth is somewhat offset by declines in the traditional enterprise server business (cloud servers are "cannibalizing" on-premises enterprise servers to some degree). Intel's strength here has traditionally been in its processor products/designs, but it has been trying to capture more of the pie by building out its presence in other data center products like networking switches, HPC interconnect fabric, and soon even 3D XPoint memory, which Intel hopes will cannibalize DRAM in some servers/applications (Intel has no DRAM presence, so this is theoretically all upside).
The risk here is that Intel's DCG has virtually 100% share of the server processor market and many companies have publicly said they aim to take significant share (ARM says it expects partners to get ~25% market share by 2020, AMD wants "double digit" share, and IBM is pushing OpenPOWER pretty hard).
Another area that has been successful is its Internet of Things group, which is essentially Intel's embedded business under a fancier, more analyst/stockholder friendly name. Intel has seen reasonable success here so far -- its IoT business is nearly at $3 billion/yr in revenue -- and there's a lot of excitement around new markets like self-driving cars since these have the potential to have both high volumes (lots of cars get sold per year) as well as high dollar content per car (lots of computing power needed per car).
Intel has obviously struggled in the mobile market, particularly mobile SoCs for smartphones and tablets. Intel has lost a lot of money chasing this market, but it has recently scaled back its investments here and seems to be focusing mainly on standalone modems for Apple (and other potential applications in IoT and in PCs, but revenue here is not significant).
Intel is also doubling down on its non-volatile storage business, which mainly sells NAND flash based SSDs into data center and high-end consumer. This business can be very volatile as it is a cyclical commodity business. Intel thinks this is going to be a big growth opportunity for them, though.
Circling back to PCs, most of Intel's revenue still comes from PCs, and this market is expected to be in decline for the foreseeable future, so that serves as a millstone around Intel's neck -- even if its other businesses, collectively, grow nicely, the company's overall growth rate could still be anchored down by the performance of the PC market (barring some massive upward inflection in PC demand, for example).
Intel has talked up opportunities in contract chip manufacturing for third party companies to try to gain some business from TSMC/Samsung, but so far the revenue contribution from this is a rounding-error away from 0. Intel did not present about this opportunity at its latest investor day, so it's unlikely that the company expects any big surge in revenue here anytime soon.
tl;dr -- Intel is a company that has been wildly successful in the personal computer market, but its immense success here is now working against it as declines here are expected to offset the growth that the company hopes to continue to see in other, healthier end markets.