Business

Look at Mega Chip Maker


Never before has a corporation done so much with so little. Established in Mountain View, Calif. on July 18, 1968, by Robert Noyce and Gordon Moore, Intel Corp. (INTC) has been virtually one of the world’s leading manufacturers of microprocessors and chipsets since its inception.

According to data from Statista, Intel is still the largest semiconductor company in the world based on revenue from 2009 to 2020, but rival Samsung Electronics (SSNLF) takes the top spot in 2021. In 2022, Intel’s revenue of $ 58.4 billion is in second place after Samsung’s $ 65.6 billion in revenue, along with SK Hynix, Qualcomm (QCOM) and Micron Technology (MU) made the list of the top five revenue generators in the industry.

In this article, we will look at the strengths of Intel that have kept it at the top Semiconductor industry too long. In addition, we will look at the challenges the company will face in the coming years as competition gets tougher for this major chipmaker.

Pull out key

  • Unlike some competitors that outsource manufacturing to foundries in China, Intel builds its own products at Intel-owned facilities.
  • In 2020, Intel lost a longtime and lucrative customer when Apple announced that it was developing its own semiconductor solutions, and that its new laptops and desktops would not be available. use Intel processors anymore.
  • Intel has lost market share to rivals—such as Taiwan Semiconductor Manufacturing Co, Advanced Micro Devices Inc., and Samsung Electronics.
  • In response to criticism from an active hedge fund, Intel replaced CEO Bob Swan with VMware CEO Pat Gelsinger in February 2021.
  • In September 2022, Intel broke ground on a new large semiconductor plant in Ohio.

In-house Crafting

What sets Intel apart from most other companies semiconductor company is that it makes its products in-house. The majority of semiconductor “manufacturers” do the actual work of making products for foundries in China. Intel even makes chips for other companies—most of which are too small to be considered a real competitor. Is that a conflict of interest? Not really. Fabrication plants can cost several billion dollars to build, and it makes sense for Intel to stay busy with its factories.

Intel actually assembles chipsets in China, but at facilities owned by Intel. Some Americans believe that low labor costs make China factory of the world and default manufacturing base for US corporations looking to save a few cents per unit and “move jobs abroad”. That statement is sometimes more accusatory than true.

At the end of 2022, Intel has a large workforce of 131,900 people. Almost half of Intel chipsets and processors manufactured in-house, at facilities in suburban Phoenix, Albuquerque and Portland. Outside of China, most of Intel’s remaining products are developed in Israel.

The semiconductor industry uses the term “fabless” to describe a company that designs and markets its chips while outsourcing the fabrication to a third-party manufacturer. Some of Intel’s biggest competitors—Nvidia Corporation and Qualcomm—are legendary company.

The competitive world of chip sourcing

Given that Intel makes other companies’ chips at its facilities, it’s more common to partner with companies that in some contexts could be your competitors than you might think. For example, in 2007, Apple Inc. (AAPL) began using proprietary Intel chips in its Macs, replacing the PowerPC CPUs that Apple itself helped develop as part of the consortium.

But that long partnership with Intel ended in 2020 when Apple announced that its new laptops and desktops would no longer use Intel processors. Instead, the machines will be powered by Apple’s new M1 chipthe company developed as part of an “Apple silicon” plan to own and control the key technologies behind their products.

The loss of a valuable (and lucrative) customer was a heavy blow to Intel. In its 2020 annual report, the company said one of its biggest challenges going forward is dealing with the loss of revenue from customers like Apple, who decided to cut ties and grow. design their own semiconductors.

Moore’s law

Gordon Moore, the co-founder of Intel, has named himself the most famous observation in the field of technology. Developed in 1965, Moore’s law say that transistor density doubles every two years. Not only has the observation been held ever since, but Intel has officially incorporated the law into its corporate strategy. In 2020, the company claims to have doubled its combined 14nm and 10nm production capacity in just a few years. This allows Intel to expand its 10nm product line and launch the next generation of mobile PC processors.

Watch now: What is Moore’s Law?

So who is going to buy all these Intel chips? By 2022, Intel has three major customers that account for 42% of the company’s net revenue. Dell Inc. accounted for 19%, Lenovo Group Limited accounted for 12% and HP Inc. accounted for 11%.

The market changes

Above capitalization use With its market leadership, Intel has over the years shifted some of its focus to smaller devices and embedded systems. The latter refers to chips placed in something other than a standalone computer, which can include everything from cars and planes, to traffic signals and factory assembly lines.

Like any corporation of this size ($114.7 billion) Market capitalization as of April 27, 2021), Intel has a complex business organization. The company has five main divisions or groups:

  • The Customer Computing Group includes Intel’s core processor systems for desktops, laptops, and tablets.
  • The Data Center group includes products for cloud infrastructure and communications.
  • The Internet of Things The group includes products designed to connect to the internet in areas such as retail, transportation, industrial, video, buildings, and smart cities.
  • The stable memory solutions family creates storage and memory products with innovative form factors based on Intel Optane technology and Intel 3D NAND technology.
  • The Programmable Solutions Group offers programmable semiconductors for the corporate cloud and enterprise market segments.

Intel Faces Criticism

While Intel’s business teams have a reputation for cutting-edge innovation, that reputation has been closely monitored by activist hedge fund Third Point LLC in December 2020. Third Point criticized Intel’s management for losing market share to competitors, especially by losing customers like Apple, Microsoft and Amazon developing solutions. their own semiconductor solutions and send their designs to Asia for sale. make. Additionally, Intel has been reprimanded for not retaining some of its top chip designers and leaders, who are slowly leaving the company.

Third Point CEO Daniel Loeb asked Intel to consider strategic alternatives, such as divestments about failed acquisitions and decide whether it should continue as an integrated equipment maker. Bowing to pressure, Intel’s board announced that CEO Bob Swan will be replaced by VMware CEO Pat Gelsinger in February 2021.

Intel breaks ground on mega factory in Ohio

In September 2022, Intel officially began construction of a huge semiconductor manufacturing facility near Columbus, Ohio. The project leverages billions of dollars in grants from the federal government. The Biden administration has highlighted the project as an important step to bring manufacturing jobs back to the United States and an important measure to strengthen the country’s economy and national security.

The project has a staggering price tag of $20 billion, which is expected to bring significant economic benefits to the region. It is estimated that the new factory will eventually create 3,000 more jobs for Intel, in addition to the 7,000 construction workers hired by the project, and is accompanied by growth in the services sector. However, the scope of the project has raised concerns about how it will affect the area’s housing market, and locals have questioned the facility’s potential environmental impact. Intel.

Where is Intel’s headquarters?

The chipmaker’s headquarters is in Santa Clara, California. Additionally, Intel maintains a worldwide presence, with manufacturing facilities in countries including Israel, Ireland, and China.

Who are Intel’s main customers?

As of 2022, 42% of Intel’s net revenue comes from three key customers: Dell Inc, Lenovo Group Limited, and HP Inc. In 2020, the company’s important long-term partnership ended when Apple Inc. announced that their Macs will no longer use Intel processors.

When was Intel founded?

Intel was founded in 1968 by Robert Noyce and Gordon Moore. Moore co-founder named Moore’s Law, the famous observation about the speed and rapid development of semiconductor chips. Intel has incorporated Moore’s Law into its strategy, and the company emphasizes its focus on research and development as a key factor behind its success.

Key point

Some companies dominate an industry, do not innovate, and fall into disrepair (e.g. Howard Johnson and Kodak). Others have great ideas but never manage to capitalize on them. The company can leverage intellectual firepower with the ability to command market share is a company that can be both strong and relevant for decades.

Although Intel has enjoyed more than 50 years of dominance in the semiconductor industry, it faces fierce competition from rivals—such as Taiwan Semiconductor Manufacturing Company, Advanced Micro Devices Inc. ., and Samsung Electronics—this could raise questions about Intel’s future dominance in the semiconductor industry.

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