Will Intel Ever Be Successful Outside of the PC Market?

Intel (INTC) made a smart move to terminate its business of developing applications processors for smartphones earlier this year, as the company faced severe downturns in that business. But Intel’s acquisition of Via Telecom’s modem business in 2015 indicates that the company was shifting its focus in the direction of modem market, which has now started paying off.

As per a report from Bloomberg, it is likely that Apple will use Intel’s baseband modem chips for its iPhone grounded on AT&T’s network. Moreover, Intel will also provide the modems for other models in international markets.
However, it is certain that Qualcomm’s processor will be used in the models designed for China. But, if Intel finds a way in around one fifth of the total iPhones devices, it will be a great achievement for Intel, as it will definitely boost the company’s revenue and profits.

On the other hand, Intel is also focusing aggressively on the non-volatile memory market. The company’s 3D Xpoint technology, which was developed by Intel and Micron technology together, is a great step forward. It is predicted that Intel will launch its first storage drives grounded on its 3D Xpoint technology in the first half of the next year. The company strategies to use 3D Xpoint based storage drives in the desktop PCs.

Apart from this, Intel is slowly diversifying its revenue stream by reducing its dependency on PC business, which makes sense given the declining PC market. In 2010, Intel bought McAfee for around $7.68 billion. It was a dangerous step taken by the company. However, Intel has now decided to sell McAfee as security growth has been cut off from the PC by cloud.

If the deal is successfully executed, Intel will get around $7.7 billion from the sale of McAfee, and the cash received from that deal will help the company to build its cloud sub-system business and its Internet of Things chip business, as both of these segments have lot of potential to grow further.

Conclusion

Intel has made several mistakes in the past, but that shouldn’t cloud investors’ judgement of their future. It seems to me that the company has learned from its mistakes and is taking some shrewd steps to drive growth in future.

The diversification of its business will be successful in the long-term as the company is proficiently targeting several high-growth markets. Hence, I think investors should buy Intel.
Published on Jul 5, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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