Intel may see $2B growth beyond PCs in 2013

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.