SAN JOSE – Next year, Intel is poised to generate $2 billion in revenues—half its expected revenue growth—from chips outside its traditional PC x86 processors, according to a financial analyst who tracks the company.
With its relatively new embedded, NAND flash and wireless products, “Intel has dramatically outperformed its competition on revenue growth and/or profitability from 2008-2012 and is poised to extend these gains in 2013,” said Ross Seymore, an analyst with Deutsche Bank Equity Research.
“These segments have the potential to generate about 50 percent of the $4 billion revenue growth implied in our 2013 estimates, leaving us more confident in upside potential and Intel's share price,” said Seymore who continues to rate Intel’s stock as a buy.
Specifically, Seymore said revenue for Intel’s Intelligent Systems Group has nearly doubled over the last five years and is poised to top $2 billion in 2012. Its NAND Solution Group revenue has tripled since 2008, and enjoys the best margins in the NAND industry by focusing on high value segments. Intel’s wireless group, still in an early stage, is already a $2 billion business, and the company believes it can grow more than 50 percent in 2013, the analyst said.
The development is arguably a historic milestone for the company. Intel has tried for years to expand beyond the PC market with little success to date. During the dot-com boom in acquired a handful of communications chip companies and even started a data center business, but had to jettison nearly all its plans after the market turned sour.
Intel is not without its risks. The company could see slower than expected PC unit growth, face market share losses to AMD, or see selling prices decline, he noted.
It is good to see some revenue predictions coming from non-PC chip business for Intel (after all those communications business acquisitions it made in 2000's). But the article doesn't say what % of the total revenue new business opportunities will the non-PC business bring?
Does the Intel "Intelligent Systems Group" build something besides Atom processors? If not, how is that different than any other x86 business? They also seem to need additional 6 or 7 Series chipsets to supply the normal SoC IO (E.g. HDMI or PCIe). Other SoC providers put these on-chip, so I'm not sure how this is competitive in price, power, or size.
Intel confirms that Medfield, its smartphone applications processor platform, is part of the same wireless group as the former Infineon baseband business.
Right now, I suspect the vast majority of that group's business is from the baseband chips. The x86/Atom-based smartphone processors are just getting their first design wins.
It is unlikely Intel is going to be able to charge $100 for Wireless Application SoC. If they are only going to sell it $10 to $15 and 30-40% margin like other handset SoC vendors, Will this work for Intel business model?
There is some grey area here.
I am checking with Intel now whether Medfield is part of the same wireless group as the former Infineon baseband chip business.
Separately, Intel's embedded group does include x86-based chips.
So it is better to characterize this as Intel's growth beyond traditional PC markets rather than beyond x86 markets.
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