Intel is the leader in the integrated design and manufacturing of microprocessors found in PCs and servers. With the rise in interconnectivity of devices, Intel strives to provide the most powerful and energy-efficient silicon solution to any product “smart and connected.” The data centers used to facilitate the information stored, analyzed, and accessed by various front-end devices are mostly run with Intel server chips.
Intel historically differentiated itself first and foremost via the execution of Moore’s law, which predicts transistor density on integrated circuits will double about every two years, meaning subsequent chips have substantial power, cost, and size improvements. This scaling advantage was perpetuated through higher-than-peer-average R&D and capital expenditure budget that allows it to control the entire design and manufacturing process in an industry where the majority of competition focuses on only one phase. However, the firm had issues with its 10-nanometer process in recent years, and subsequently announced its 7-nm (Intel 4) process will be delayed until 2023, thus opening the door for competitors such as AMD to gain share.
As cloud computing continues to garner significant investment, Intel’s data center group has been an indirect beneficiary. Mobile devices are the preferred device to perform computing tasks and access data via cloud infrastructures that require large-scale server build-outs. This development has provided strong tailwinds for Intel’s lucrative server processor business. It is expected that Intel will experience continued growth in the data center, though competition from AMD and customers designing their own ARM-based silicon are potent risks.
The proliferation of mobile devices has come at the expense of the mature PC market, Intel’s historical stronghold, with ARM and its cohorts joining AMD as chief rivals. The rise of artificial intelligence has also unleashed a new competitor in Nvidia for specialized chips to accelerate AI-related workloads. Consequently, Intel is now pursuing an array of non-CPU endeavors, including a discrete GPU for AI and other data center workloads. Intel will also process through its own foundry services with the remaining capacities offered to the third-party services.
Opportunities:
- Intel is one of the largest semiconductor companies in the world and holds the lion’s share of the PC and server processor markets. The firm has maintained its position at the forefront of technology by investing heavily in R&D, and this trend should continue.
- Intel has made a string of savvy acquisitions to build its artificial intelligence and automotive offerings, including Altera, Mobileye, Habana Labs, and Movidius.
- The data center group has indirectly benefited from the proliferation of mobile devices. Server processor sales will be the main driver of growth in the near future.