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Good point. Future guidance is more important.
I wish I knew this.
Today it is 15th. As I recall today is the day when Intel will announce if any down side to the quarter.
Has any one heard anything so far?
Thanks
Thanks. I was looking for this announcement. The writer of the article was correct.
Does any one has any idea what phone from Lava will be introduced?
This person has a unique perspective on how Intel is going to play its cards in mobile markets and how it is plan to fulfill its empty factories.
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http://email.seekingalpha.com/track?type=click&mailingid=1272511&messageid=M_2800&databaseid=&serial=M_2800O1272511O1363246443&emailid=vijayc_us%40yahoo.com&userid=9163431&extra=&&&3000&&&http://seekingalpha.com/article/1272511-intel-the-mobile-business-in-a-large-nutshell?source=email_rt_article_title
Yes, he might say that. But Intel does have ATOM derivatives for Micro servers in case OEMs demand it
Here is the link for the my earlier post
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http://blogs.barrons.com/techtraderdaily/2013/03/13/emc-says-slim-prospects-for-arm-based-servers/
Here is news which throws cold water on ARM based servers. I think this should put iit to rest whether ARM will encroach upon Intel turf any time soon.
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EMC Says Slim Prospects for ARM-Based Servers
By Tiernan Ray
At EMC (EMC) and VMware‘s (VMW) analyst day event in New York, VMware CEO Pat Gelsinger was asked about how meaningful servers based on ARM Holdings (ARMH) will be in the server world.
“We’re skeptical,” said Gelsinger, that chips outside of Intel (INTC) and Advanced Micro Devices‘s (AMD) “x86? chips will find much uptake outside of “niche use cases.”
“Even if you could drop the power consumption of x86 by 25%, it wouldn’t make that much of a difference,” said Gelsinger, referring to purported power consumption advantages of the ARM chip architecture.
“Chip architectures don’t change because of 25% power improvements. You’ve got to have 10X power improvements to make that happen,” he said.
On a separate note, UBS technology analyst Steve Milunovich asked Gelsinger and the other executives how they will avoid being “disrupted” by “100 startups in Silicon Valley” that are pushing flash storage and cloud computing and other changes.
EMC’s CFO David Goulden responded that the company is capably addressing the things that customers are looking for, namely the ability to build a secure, capable operation in their own facilities versus what they can get from most public clouds.
Added Goulden, “We will be virtualizing every capability we have on the storage side through software.”
EMC shares are up 48 cents, or 2%, at $24.95, while VMW is up $7.34, or almost 10%, at $82.63.
Elmer,
There was no link otherwise I would have posted it along with the paragraph.
This analyst also thinks that even TSMC is having trouble with 20nm process. Samsung will have the similar issue.
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UBS downgraded Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) from Buy to Neutral.
Analyst Jonah Cheng said most of the good news is already priced in. Cheng also noted that Taiwan Semiconductor will post only low single digit quarter-over-quarter growth and pointed out stiffer competition from Intel (Nasdaq: INTC) and weak performance in 20nm process. The analyst also warned of more customer losses in addition to Altera (Nasdaq: ALTR) if it doesn't improve performance in 20nm.
For an analyst ratings summary and ratings history on Taiwan Semiconductor (NYSE: TSM) Manufacturing Co. Ltd. click here. For more ratings news on Taiwan Semiconductor Manufacturing Co. Ltd. click here.
Shares of Taiwan Semiconductor Manufacturing Co. Ltd. closed at $17.73 yesterday, with a 52 week range of $12.14-$19.25.
If Intel starts building chips for ARM, then what will happen to all the partners like ZTE, Lenova, Orange and Lava and others who are planning to build smart phones based on Intel ATOM chips. It will amount to abandoning them.
This foundry business will become a real big thig really soon.
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INTC: AAPL Would Be ‘Big Kahuna’ in Foundry Biz, Says JP Morgan
By Tiernan Ray
J.P. Morgan semiconductor analyst Christopher Danely today reiterates a Neutral rating on shares of Intel (INTC) while pondering what he calls the “butterfly effect” of Altera‘s (ALTR) announcement last week it will use Intel to produce the most cutting-edge versions of its chips as a contract manufacturer.
As I wrote yesterday, the rare move by Intel to open its factories to another chip maker is prompting speculation about how far it will go. Danely, thinks that out of a $38.4 billion annual foundry market, Intel could achieve perhaps $4.2 billion annually, and 12 cents in EPS, by adding customers such as Cisco Systems (CSCO) and Brocade Communications (BRCD) for their custom application specific integrated circuits (ASIC):
We believe Cisco and Brocade will be the next customers to sign up, and the Cisco and Brocade ASIC business could reach $370.0 million by 2017, or 0.6% of Intel’s sales. We believe Cisco and Brocade represent a good strategic fit for Intel as they do not compete directly with Intel. However, we believe the ASIC business will gradually ramp over several years, and we do not expect Cisco/Brocade ASICs to have an immediate impact on Intel.
But part of that $4.2 billion, Danley writes, would be adding upwards of half of Apple‘s (AAPL) foundry needs.
Landing Apple would be a “big kahuna,” perhaps adding as much as $3.6 billion to Intel’s income statement by 2017, or 8 cents per share in profit, writes Danely, but probably wouldn’t bring along Intel’s “Atom” processor division, as Apple prefers its custom approach with its own “A” series processors:
Given their deteriorating relationship, there has been much discussion surrounding the future of the Apple and Samsung [Electronics (005930KS)] foundry partnership. Apple currently outsources 100% of its applications processor manufacturing to Samsung. We believe Apple will use TSMC in the near term, rather than Intel. However, we believe Intel has a decent chance to land some of the business over the next few years. If Intel were to win 50% of Apple’s foundry business, we estimate it would add $3.6 billion (6%) in incremental sales and $0.08 EPS (4%) in 2017 […] Apple prefers to develop its own applications processor technology as it has done with prior generation iPhones and iPads. In 2008 Apple acquired PA Semi to help the company develop SoCs. Later, in 2011, Apple acquired fabless semiconductor company, Intrinsity, to gain access to a set of tools that enable higher clock speeds. Most recently, Apple announced the acquisition of AuthenTec, a manufacturer of fingerprint sensors, in July 2012. We would note Apple’s proprietary iOS operating system is considerably leaner than Windows, has lower memory requirements, and does not require the additional computing power and performance of an x86 processor.”
Of course, a sticking point is that Intel might not be willing to dedicate stand-alone fab capacity to Apple in the same way that Taiwan Semiconductor Manufacturing (TSM) is willing to do:
We believe TSMC is committed to dedicating significant manufacturing space for Apple products. In July, 2012 TSMC CEO, Dr. Morris Chang stated “now it makes complete sense to dedicate a whole fab to just one customer—a whole fab or two whole fabs, in fact—to just one customer” as some customers (such as Apple) are growing rapidly. We do not believe Intel is prepared to construct and dedicate an entire wafer facility to Apple as we expect the company’s capex dollars will be used primarily for its higher margin microprocessor business.
Danely offers the following chart of what Apple’s foundry business might add up to for Intel:
Danely’s colleague Rick Hsu, who follows Taiwan Semi, sees that company little affected, even if Intel snags some Apple business:
Our J.P. Morgan foundry analyst Rick Hsu sees TSMC excelling in process libraries, cost structures, manufacturing excellence and scale advantage, but lagging behind Intel on technologies. Yet we believe TSMC aims to narrow, if not close, the gap with Intel by introducing/redefining its 16nm finFET process and then jumping straight to 10nm by 2017. We see little impact from the Altera-Intel agreement, and the Apple contribution to TSMC remains intact even assuming Intel gets 50% business.
http://blogs.barrons.com/techtraderdaily/2013/03/05/intc-aapl-would-be-big-kahuna-in-foundry-biz-says-jp-morgan/
I also would like to know those numbers. Only ZTE and Intel would know that. Add others countries in Europe to Austria. I would guess Intel/ZTE would have significant position in those markets. With introduction in France, it will increase further. France has already Orange to start with.
Here is a news we all have been waiting for:
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TE announced a strategic collaboration with Intel (Nasdaq: INTC) focused on the new Intel Atom? Processor Z2580 platform recently announced at Mobile World Congress. The platform will bring significant performance enhancements to the next generation of ZTE smartphones with Intel Inside.
The collaboration with Intel is an important part of ZTE's strategy for product development, both in terms of time-to-market and in providing customers' with a great handset experience. ZTE is currently working with Intel to develop unique smartphones based on the Intel Atom Z2580 processor. The platform's dual-core processor with Intel Hyper-Threading Technology provides double the compute performance and up to 3x graphics capabilities over the previous generation Intel Atom? Z2460 processor while delivering the same competitive battery life.
This latest engagement builds on the multi-year relationship between ZTE and Intel that has already produced the successful ZTE Grand X IN, ZTE's first smartphone with Intel Inside. The ZTE Grand X IN was one of the best-selling smartphones in Austria during 2012. The Android*-based device is also available in Germany, Poland, Hungary, Romania, Serbia, Macedonia, Slovakia, Moldova, Greece, Sweden and Norway. It will also soon be available in France.
"The Grand X IN was ZTE's first flagship smartphone in Europe to feature Intel Inside. We've launched it successfully across Europe in strong cooperation with Intel, and as a result have significantly increased our brand awareness in these important markets," said Mr. Ao Wen, General Manager of ZTE Europe Mobile Devices. "We are looking forward to both continuing and broadening the relationship with Intel to support ZTE's growth in the high performance smartphone market segment. Intel is one of our strategic partners in the development of cutting-edge new mobile technologies."
"Our work with ZTE has been instrumental as we work to expand our portfolio of mobile products and bring to market exciting new designs with Intel Inside, It's great to work with ZTE on the new family of Intel Atom processors for smartphones and we're confident that the combination of high performance, competitive battery life and overall value will be appreciated by consumers," said Hendrik Unkel, Director for Marketing and Business Development at Intel.
Intel and Atom are trademarks of Intel Corporation in the United States and other countries.
http://beta.fool.com/stockriters.com/2013/03/04/inside-intel/25826/?ticker=ARMH&source=eogyholnk0000001
Inside Intel
By Sujata Dutta - March 4, 2013 | Tickers: AMD, AAPL, ARMH, INTC, MSFT | 1 Comment
Sujata is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Intel (NASDAQ: INTC), the $101 billion tech giant is amidst a flurry of activity. The company has been buying back its stock, issuing bonds, paying dividends, launching new products and the company’s CEO is going to retire in May 2013. Where is the company heading?
Stock Price
The company’s stock price has been languishing in the range of $20 to $28 for the past three years. And although the company has had a very consistent policy of paying dividends annually (and has been increasing it over the period), the company’s stock price has never been able to cross $35 in the past 10 years. This is despite the fact that the last time the company had a split was way back in 2001. At one point in 2012 the company’s share price had fallen 15% and was around $19 - it’s lowest since August 2011. Even as of today, the company’s stock price is in the range of $20.
The Buyback Program
The company states on its website that it has an ongoing authorization from its Board of Directors to repurchase up to $45 billion worth of common stock. However, it is intriguing to know that the company had issued bonds worth $6 billion in December 2012. It stated that the company intended “to use the net proceeds from the offering for general corporate purposes and to repurchase shares of its common stock under the company’s existing share repurchase authorization.” Intel had used the same strategy in September 2011 and issued bonds worth $5 billion. In both cases, the issue of bonds was made when the price was floating at around the $20 level. The company’s stock price had reached around $29 in the intermediate term. Clearly, the company is shrewd in its buyback strategy and understands the company’s valuations better than investors.
New Ventures
Intel has announced that it plans to enter into the TV–digital entertainment business and is soon going to offer video service over the Internet and a set top box which will use Intel manufactured chips. The company said that it is going to enhance the user interface experience with various features, such as face recognition through high definition video cameras, and users in multiple locations will be able to conduct video conferencing using this device. However, I feel more than the user interface, it’s the quality of the service that is going to help Intel in this venture. Intel is known for the excellent performance of its chips, and thus the performance of this product should be very good.
However, Intel is definitely going to have to play catch-up in this segment. Firms such as Apple and Microsoft have already entered this segment and are planning various forays. Apple has its own Apple TV, which automatically synchs with the various Apple devices, while Microsoft already is using its Xbox as a TV connecting devices and is in the final stages of a cloud TV service for Xbox.
Intel has also launched its own customized version of Hadoop, an open source software used in data analysis and used by many firms in data crunching. Again, Intel is not really planning to earn a lot of revenue from the sale of this software. It is trying to capture customers using this offering. There is no doubt that this software will be the most compatible with Intel hardware. It is encouraging companies to buy servers and other hardware that use Intel chips by also giving them a software platform. Again, it is a very smart and cost effective move by Intel. Hadoop, being open sourced is basically available for free, and all you need is a team of software developers to optimize the program. No expensive investment in R&D.
Missed the Mobile Revolution?
There are concerns amongst the analysts and investors that Intel has not really been able to make inroads in the mobile computing market. However, Intel collaborated with Google to have Android running on the Intel chips (architecture). It has also come out with Atom-branded System-on-a-Chip (SoC) products for smartphones and tablets. On the back of that announcement, Intel also displayed its new low-power, multimode-multiband 4G LTE global modem, the Intel XMM 7160. This product is to be used not only in computers but also in smartphones and tablets. Thus, Intel may not be earning revenues from the mobile space yet, but it is in a very strong position to capitalize on its brand and with the right collaborations start earning dollars too.
Strong Fundamentals
The company has total cash of $18 billion; its revenues are $53 billion; its net income is $11 billion, and the company has an operating margin of 27% (higher than its competitors and the industry.) The company’s beta is 1.1. Despite the company coming out with a second bond offering of more than $5 billion in just over a year, its bonds are rated A1 by Moody’s Investor Service and A+ by Standard & Poor’s. Thus, the company has very strong fundamentals and can afford to take risks in new ventures while consolidating and growing its core business of semiconductors.
Competition?
The biggest advantage Intel has over its competitors is its huge market presence. UK based ARM Holdings (NASDAQ: ARMH) has collaborated with Microsoft to use its chips in the Windows RT. However, it’s going to take a huge effort on ARM’s part to convince the customers to shun Intel chips in their PCs. Globally, AMD (NYSE: AMD) has seen its market shrink because of Intel. As recently as 2009, Intel settled a suit filed by AMD. The suit was an anti-trust litigation by AMD claiming that it was unable to increase its market share because of Intel’s illegal techniques. When your closest competitor resorts to an anti-trust litigation against you, because it is unable to compete with you, it says a lot about your market presence. (Intel had denied any wrongdoing and settled the case out of court).
Investor Perspective
Intel is trying to make inroads in the non-semiconductor industry, while it is also concentrating on strengthening its semi-conductor business. This, coupled with the fact that Intel’s stock price is at its lowest and the company is embarking on a buyback program, makes it seem like a good time to invest in Intel. The company should at least reach its highs of $28, and in case few of its many ventures succeed, the stock may go much higher than it has ever been.
IBC,
Who is stopping Apple from doing that? If it offers product that are not competitive, it will loose market share.
Here is the link for Intel LTE post which I posted earllier.
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http://blogs.barrons.com/techtraderdaily/2013/03/04/jnpr-csco-nec-steal-show-at-mobile-world-devices-were-a-yawner/
Here is good news for Intel LTE which we all have been looking for. I have highlighted the paragraph.
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3:04 PM
JNPR, CSCO, NEC Steal Show at Mobile World; Devices Were a Yawner
A number of Street observers today weighed in with their observations from last week’s Mobile World Congress in Barcelona, many of whom offered the view that from a handset/device perspective, the show wasn’t that fascinating, with most of the real interest being in the networking/infrastructure side of things.
FBR Capital’s Scott Thompson today wrote “MWC 2013 was much less about the latest and greatest wireless devices and much more about mobile infrastructure and its transition to a more software-based business model.”
Thompson notes there was a lot discussed about making networks more nimble through software, I theme I also heard from industry analysts with whom I spoke at the conference. (My write-up of MWC in Barron’s print edition this week can be found here.)
Writes Thompson:
We continue to believe the Web 2.0 and service-provider space are transitioning to cloud-based virtual platforms much more quickly than consensus expects. Many of the keynote speeches from large service providers (AT&T, NTT, KT, DT, and others) stressed the importance of the flexibility that highly scalable, rapidly provisionable, and cost-efficient datacenter-based networks deliver […] Conversations with [Juniper Networks (JNPR)] CEO Kevin Johnson and EVP of Software Services Bob Muglia revealed a decisive shift in their views: They both seem to expect SDN to affect the industry within the next six months, well ahead of the two- to three-year consensus view. NEC, Hitachi showcase full suite of SDN-enabled network solutions. We expect that many of the vendors that have been contributing to share taken from vendors such as Cisco and Juniper over the past couple of technology cycles are early leaders in the transition to SDN and could reclaim share during the current transition. A tour of the NEC booth revealed the development of a full suite of carrier SDN solutions, including an SDN controller, virtualized wireless backhaul, virtualized WiFi and small-cell controllers, network provisioning software, and other technologies targeted at the service-provider space. Both companies boasted of 10 to 20 simultaneous trials at Tier 1 carriers around the globe.
Another analyst with enthusiasm for networks is Wunderlich’s Bill Harrison, who writes that infrastructure build-outs in China and elsewhere can be good for IDT (IDTI), LSI (LSI), Silicon Labs (SLAB), and PMC-Sierra (PMCS), all of whom he rates Buy.
LSI and PMCS will benefit from AT&T’s deployment of so-called small cells versus traditional tower base stations, writes Harrison, while SLAB should benefit from General Motors‘s (GM) announcement last week it will put 4G wireless in cars starting next year. But he also homes in on China’s infrastructure development of “long-term evolution,” or LTE:
China Mobile (CHL) President Yu Lie said during his speech that TD-LTE deployments will start this year following the months of tests and trials for the Chinese-specific, home-grown flavor of 4G. The TD-LTE network is expected to cover 100 Chinese cities by year’s end. The previously announced equipment provider winners for the tender for this build out are led by: Alcatel-Lucent (ALU), ZTE, Nokia-Siemens, Ericsson (ERIC), Huawei, and Datang. The compatible TD/LTE devices should launch mid-year, and ~1 million should be purchased by the final days of 2013. IDTI and LSI should benefit from the launch of these deployments and we see PMCS benefiting as these basestations are linked together for back hauling.
Reflecting on devices, Deutsche Bank’s Ross Seymore today writes that “MWC 2013 came and went with even less fanfare than last year’s event, as no significant new devices or technologies were announced.”
“From a device perspective, ‘phablet’ launches demonstrate increasing form-factor convergence, calling into question the future of 10? tablets, in our view”:
Reviewing the meaningful product announcements at the show, we see a theme of device form factor convergence emerging with the sweet spot for mobile devices shifting to 5” to 8” phablets with cellular connectivity vs. purpose-built 4” smartphones and 10” tablets. The 7” Asus Fonepad tablet with 3G connectivity at $249 and 8” Samsung Note 8 are compelling examples of this trend.
The rise of Chinese vendors ZTE, Huawei, and Lenovo promises more pressure on semiconductor average selling prices, writes Seymore.
He sees Intel (INTC) and Broadcom (BRCM) making some inroads into wireless baseband chips despite Qualcomm‘s (QCOM) strong hold:
Competition is clearly heating up in the LTE race, as handset OEM’s look for alternative suppliers to diversify from a dominant QCOM. Given the similarity in product specs and availability among suppliers all vying for share within a market that offers limited opportunity for differentiation, we think strength in OEM relationships and product execution will determine the winners. Consequently, we believe BRCM and INTC are well positioned behind QCOM and are set to emerge as top-3 players in discrete LTE basebands in 2014 and integrated AP/LTE basebands in 2015/16. Outside of baseband, we believe AVGO stands as a clear beneficiary of LTE due to its position in increasingly necessary high end filtering (FBAR) and view the stock as the best way to play accelerating LTE adoption in an OEM agnostic fashion.
I am not sure this will lead to Apple contract.
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INTC: Altera Deal Practice for an Apple Contract, Wells Speculates
By Tiernan Ray
Wells Fargo’s David Wong today reflects on “the changing foundry landscape” in the wake of last week’s news that Intel (INTC) will take on programmable chip maker Altera (ALTR) as a customer for Intel’s contract chip manufacturing.
Writes Wong, who has an Outperform rating on both Intel and Altera shares, the deal “highlights the value of Intel’s manufacturing technology capability,” and is probably a prep for doing a deal with Apple (AAPL) down the road.
Wong notes Altera’s business is inconsequential to Intel’s income statement, and so probably the agreement is a trial run for the chip maker, and that it could give the company an even greater edge over contract houses such as Taiwan Semiconductor Manufacturing (TSM):
The Altera arrangement is in itself small for Intel. In the December 2012 quarter, Altera’s total cost of goods sold was $133 million while Intel’s cost of goods sold was $5.66 billion and Intel’s revenue $13.5 billion. Clearly potential foundry business from Altera represents a tiny fraction (at most 1%, probably a lot less) of Intel’s total manufacturing business and capacity. We conclude that: The Altera/Intel arrangement will not have any meaningful effect for Intel’s gross margin or for its capital spending plans; It is unlikely that Intel considers the Altera arrangement an end in itself […] We believe it unlikely that Intel will enter into many more foundry arrangements with other chip companies. Our guess is that Intel’s interest in doing the Altera foundry arrangement is that its sees this as a way of exercising how to negotiate and execute a fairly small foundry agreement, and a demonstration of its foundry capabilities, with the goal of eventually securing strategic foundry customers such as, perhaps, Apple. Intel has noted that as time passes and the costs of building leading edge fabs rises, there are fewer and fewer companies that have enough scale to justify the cost of building new fabs. We calculate that TSMC’s $9 billion in capital spending planned for 2013 represents about 50% of TSMC’s 2013 revenue and perhaps as much as 150% of TSMC’s revenue from leading edge manufacturing (i.e. 28nm manufacturing). In contrast, backing out the $2 billion Intel is planning to spending on 450mm technology which it does not expect to use in manufacturing for several years yet, Intel’s approximately $11 billion of capital spending for current and near- future technology planned for 2013 represents approximately 20% of Intel revenue (the bulk of which is derived from leading edge manufacturing). We think that revenue Intel diverts from traditional commercial foundries (whether this be Altera business or future Apple business) might reduce the appetite and capability of these foundries for high cost advanced technology development, potentially resulting in Intel widening its technology lead over other semiconductor manufacturers. We believe that a growing technology lead could significantly improve Intel’s ability to penetrate new areas such as the tablet and smartphone space against entrenched competitors such as makers of ARM-based chips.
Intel shares today are up 2 cents at $21.05.
http://blogs.barrons.com/techtraderdaily/2013/03/04/intc-altera-deal-practice-for-an-apple-contract-wells-speculates/
For a change Intel is mentioned as a successful company going forward.
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A phablet is a smartphone with a screen size between 5 and 8 inches. After attending the 2013 Mobile World Congress (MWC), analysts at Deutsche Bank said trends clearly favor devices of this type, which straddle smartphones and tablets.
"Reviewing the meaningful product announcements at the show, we see a theme of device form factor convergence emerging with the sweet spot for mobile devices shifting to 5" to 8" phablets with cellular connectivity vs. purpose-built 4" smartphones and 10" tablets. The 7" Asus Fonepad tablet with 3G connectivity at $249 and 8" Samsung Note 8 are compelling examples of this trend," said analyst Ross Seymore.
Seymore thinks these devices call into question the future of the 10" tablet.
For chip makers, the analyst said he continue to see a precious few chip companies that have the ability to succeed in this space, with QUALCOMM (Nasdaq: QCOM), Intel Corporation (Nasdaq: INTC), Broadcom Corp. (Nasdaq: BRCM) and Avago Technologies Limited (Nasdaq: AVGO) appearing best positioned.
Deutsche Bank has a Buy rating on Avago Technologies price target of $40.00
Foundry is a contract business where TSMC, UMC, Global are playing along with Intel. Though Intel is new to the party. Any one go any players if it makes sense for them to do business.
It is a common practice in contract manufacturing where one customer can demand that it does not want to do business with a particular contractor because its competitors products are being built.
In this example, Altera put that condition and Intel will have to agree if it wants its business. It is quite different from selling commodity processors.
I also recall from old days that Altera design tools were a lot closer to what Intel had. That might explain why Altera and not Xilinx.
Qualcom not but I would not rule out Samsung. Today it announced product using Qualcom chips S600. also Samsung and Intel are working together on OS for smart phones/tablets.
Yes. Here is more on this news. There is another implied news here. Intel will build mobile chips for some one with huge volume. Apple only comes to mind but that will be its competitors.
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SAN FRANCISCO, Feb 25 (Reuters) - Intel Corp has agreed to make chips on behalf of Altera , a significant step toward opening its prized manufacturing technology to customers on a larger scale, potentially including Apple .
Sharing its manufacturing plants, or fabs, to strategic customers could help the world's top chipmaker offset the growing costs of developing new technology and help keep the plants running near capacity as Intel's traditional PC business loses steam.
Intel will make Altera's programmable chips using its upcoming 14 nanometer trigate transistor technology, the most notable agreement of its kind announced so far by the chipmaker.
"It's a step in terms of building into a business level we wish to achieve," Sunit Rikhi, Vice President and General Manager of Intel custom foundry, told Reuters on Monday. "There's no doubt in my mind the foundry will be a significant player in the future."
Building new generations of chip manufacturing plants is becoming more and more expensive, and Intel has said in the past it was willing to open its facilities to carefully selected customers - as long as doing so does not its help competitors.
Intel has announced agreements to manufacture on behalf of Achronix Semiconductor Corp and other small chipmakers but Monday's announcement with Altera, one of two leading programmable chipmakers, is potentially much larger.
"They've crossed over the line from it just being a questionable experiment to - we're going to do this for tier-1 customers," said RBC analyst Doug Freedman.
With Intel struggling to find its footing in smarpthones and tablets with its own processor designs, some investors believe Intel may eventually agree to make Apple's processors for the iPhone and iPad.
"If and when we are called upon to serve large mobile customers who can drive a lot more volume, we could serve them today in terms of capability," Rikhi said. "I'm confident we have a very strong platform of offering upon which we can scale."
He declined to discuss Apple specifically.
HEAVY INVESTMENT
Most chipmakers in recent decades have given up running their own capital-intensive fabs, turning instead to contract manufacturing "foundries" like Taiwan's TSMC.
Intel has kept its own fabs and invested heavily in them over decades, resulting in a lead in manufacturing know-how that allows it to make chips that in some respects are more advanced than products from rivals like Qualcomm and Samsung Electronics .
Altera Chief Executive John Daane told Reuters in a phone interview that Altera, which depends on communications infrastructure for about half of its business, is the only major programmable chipmaker that will have access to Intel's plants.
"We are essentially getting access like an extra division of Intel. As soon as they're making the technology available to their various groups to do design work, we're getting the same," he said.
Daane said Intel's manufacturing technology will give Altera's chips a several-year advantage against Xilinx , its main competitor in programmable chips. He said Altera would continue to make other chips with TSMC, its long-time foundry.
Shares of Altera were unchanged in extended trading after closing down 0.96 percent at $35.01. Xilinx was down about 0.9 percent at $37, versus a close of $37.30 on the Nasdaq.
Intel's stock was up 0.49 percent in extended trade after closing down 0.93 percent at $20.23.
I don't think Xlinx will get to use Intel processes. The article implied it. Intel and Altera relationship goes quite far.
I think it could be Cisco as an official customer.
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Intel (NASDAQ: INTC) is getting closer to a material foundry design win, according to RBC Capital analyst Doug Freedman.
"We believe the move into a foundry relationship is a positive, highlighting Intel's process technology lead," Freedman. "It may also go to explain the recent significant capital spending plans."
That said, the analyst notes that the need to seek outside designs to leverage the process technology is something Intel has not had to do in the past. "In signing a foundry customer, Intel must be careful to build products that are complementary and not competitive with internal aspirations."
From a business model standpoint, Freedman expects average gross margins to decline while revenues accelerate. The net result would be faster earnings growth with stable operating margins, he said. "Success in the foundry business would be defined as incremental revenues in excess of $2 billion per year."
In the past Apple (Nasdaq: AAPL) was mentioned as a potential foundry customer for Intel.
The reasoning that Intel does not have LTE at the moment for lack of significant market share also does not hold water. Intel in my opinion focused on countries outside US for its to work out any bugs or issues with its chips/software/drivers etc. This is born out for the fact that there too many players with LTE solution. Intel could have easily licensed it from any one of them. See the article below. Intel also wants to make sure that it can implement its own LTE and that also on the same die.
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12:25 PM
BRCM Entrance to Crowded LTE Market No Threat to QCOM, Says Town Hall
By Tiernan Ray
Town Hall Investment Research’s Jamie Townsend this morning opens that wireless chip makers Qualcomm (QCOM) and Sequans (SQNS) are “attractive companies based on the emerging market for LTE baseband chips.” He thinks that newcomer Broadcom (BRCM) will have an uphill battle to dethrone Qualcomm from the so-called multi-mode category of chips for long-term evolution, or LTE cellular connections.
Citing data from ABI Research, Townsend contends Broadcom enters a very crowded multi-mode product market:
One of the LTE Baseband wannabes, Broadcom has announced that it is sampling an LTE baseband chip set that it was able to develop through its acquisition of Beceem over two years ago. With this new product not expected to ship in products until 2014, we do not see it as significantly impactful, especially in the shorter term […] The LTE baseband semiconductor market can be broken into two groups, multi-mode and single-mode LTE. With the LTE market still in its early stages, most larger chip vendors are focusing their development efforts on multi-mode chips that can work in a 2G/3G/4G environment. This makes sense since the vast majority of mobile handsets and devices are currently being sold into carrier markets where the LTE network is either still in its infancy or yet to be built. There are already 36 LTE multi-mode baseband solutions in the market with Broadcom’s BCM21892 GSM/WCDMA/LTE modem being the most recent addition. According to ABI Research, Broadcom’s new product “ is a competitive solution in terms of size, node process, Release 10, Category 4, and its support of 2G/3G/4G including TD-SCDMA and both modes of LTE. By the time this product enters the market, however, an even larger range of integrated solutions will have application processors and baseband processors with or without wireless connectivity.
In contrast to Qualcomm, Sequans focuses on the single-mode LTE market, notes Townsend.
Townsend’s note is a contrast to a piece last week by RBC Capital’s Doug Freedman, who wrote that its chips could finally help it land some work with Apple (AAPL) and push Qualcomm out of the iPhone slot.
Broadcom shares today are own 12 cents at $34.98, Qualcomm shares are down 14 cents at $65.53, and Sequans shares are up a penny at $1.61
http://blogs.barrons.com/techtraderdaily/2013/02/20/brcm-entrance-to-crowded-lte-market-no-threat-to-qcom-says-town-hall/
ARM Turns Up Pressure on Intel as Even Cutlery Gets Smart
By Ian King - Feb 19, 2013 2:41 AM PT
ARM Holdings Plc, which has sprinted ahead of Intel Corp. in the market for mobile chips, poses a threat to its rival in another burgeoning business: semiconductors for machines ranging from cars to cutlery.
So-called embedded processing is ARM’s fastest-growing market, surging 25 percent in 2012. ARM got more than half of its sales from products other than mobile phones for the first time in the third quarter, and last month ARM Chief Executive Officer Warren East said the percentage will continue to rise.
Enlarge image
ARM’s advantages in faster-growing markets like mobile and intelligent systems are reflected in its shares, which trade at 49 times projected earnings, compared with a price-to-earnings ratio of about 10 for Intel. Photographer: Chris Ratcliffe/Bloomberg
Companies are snapping up chips that make dashboard stereos, utility meters and other everyday appliances more computer-like, and revenue from embedded processors will climb 23 percent to $47.3 billion in 2016 from 2012, according to researcher IDC. That’s fueling demand for ARM’s technology, used by chipmakers such as Freescale Semiconductor Ltd. and Texas Instruments Inc., helping the U.K.-based designer gain an edge over Intel.
“Intel is trying to get into the market, but ARM is already there,” said Mali Venkatesan, an analyst at IDC, a Framingham, Massachusetts-based market researcher.
Intel remains the leader in chips for personal computers, with more than 80 percent of the world’s PCs running on its processors. With the PC market shrinking for the first time in a decade in 2012 and poised for another drop in 2013, the world’s largest chipmaker is in need of new businesses to fuel growth.
Intel’s Challenge
ARM’s advantages in faster-growing markets like mobile and intelligent systems are reflected in its shares, which trade at 49 times projected earnings, compared with a price-to-earnings ratio of about 10 for Intel. ARM stock has jumped 59 percent in the past year, while shares of its larger rival have dropped 21 percent. Even with ARM’s high valuation, 40 percent of analysts who follow the company recommend buying the stock, compared with 36 percent for Intel.
ARM shares climbed 0.3 percent to 925.50 pence at 10:39 a.m. in London, giving the company a market value of 12.8 billion pounds ($20 billion).
Getting products adopted in fresh markets has been a challenge for Santa Clara, California-based Intel. Last year, Intel commanded less than 1 percent of the mobile-phone processor market and 2 percent of shipments for embedded processors, which IDC estimates will increase to 3.65 billion processors in 2016, from 2.54 billion last year.
ARM’s embedded market share will reach 68 percent in 2016, up from 60 percent in 2012, according to IDC research on what it calls intelligent systems -- common devices that are becoming more interactive through technology. Intel’s slice will go to 5 percent, IDC predicts.
Revenue Share
Still, while Intel’s shipments are a fraction of ARM’s, its embedded chips are more expensive and capable of more complex computing, giving the company a disproportionate stake of the market’s revenue, according to IDC. Intel technology accounted for 20 percent of embedded processor revenues last year, compared with 30 percent for ARM-based designs. The other 50 percent was distributed among other chipmakers.
Embedded processing is the building of computing capabilities and connectivity into devices and machinery that previously stood alone. Companies are rushing to turn vehicles into networks of sensors and minicomputers that can make sure drivers have access to their iTunes libraries or stop the vehicle if the brakes aren’t hit early enough.
Everyday equipment like thermostats and electricity meters are being linked up to the Internet, requiring processors to analyze data and transmit or receive instructions. Even some forks now analyze how fast you eat, so you can slow down to lose weight or ease digestion.
‘Ubiquitous’ ARM
Device makers and their chip suppliers are turning to ARM designs because its dominance in smartphones has drawn a flood of software developers and engineers to the technology, making it easier and cheaper to standardize.
“It has become ubiquitous and everyone wants to design off of it,” said Hans Mosesmann, an analyst at Raymond James & Associates Inc. “It’s a monumental task to offset the tsunami that’s happening. We’re big fans of the non-smartphone part of their business.”
Cambridge, England-based ARM doesn’t make semiconductors itself -- it sells processor designs and licenses fundamental chip technology to companies including Texas Instruments, Samsung Electronics Co. and Qualcomm Inc. ARM’s annual sales, which reached $914.4 million in 2012, are a fraction of Intel’s more than $50 billion in revenue.
Automotive, Retail
Intel, meantime, is focusing on the automotive, retail and industrial-control markets, trying to bring a greater ability to analyze data locally and keep it secure, said Ton Steenman, who heads Intel’s Intelligent Systems group.
Intel’s chips and software are now in phone systems, PepsiCo Inc.’s smart vending machines that can vary sales pitches, entertainment systems in cars made by Bayerische Motoren Werke AG and Kia Motors Corp., and in industrial tools such as automated farm machinery that can run at night, he said.
“We are not building solutions today that control a little valve and doesn’t do much more than that,” said Steenman. “We are investing in the type of application where the richness of the data processing is a key attribute. That is where there is a lot more differentiated and sustainable value that can be created.”
While East said it took longer than he expected for non- phone-related sales to become the majority of ARM’s revenue, he expects that percentage to keep rising as the surge in smartphone demand lures more software developers and hardware engineers to his company’s technology.
Awaiting ‘Bang’
Consumers have become used to the convenience and capacity of smartphones, and are starting to expect similar functionality and ease of use from televisions and other electronic devices, East said in an interview last month. That will happen when software begins to take more advantage of the capabilities of small, power-efficient chips commonly seen in phones, he said.
“That’s the way the technology market works: It’s these things that anyone in their right mind can see is going to happen, but there’s always inertia,” East said in the interview. “The technology solution is in place, but it seems to take forever and ever to happen. Then when it happens, bang, it happens quickly.”
http://www.bloomberg.com/news/2013-02-19/arm-turns-up-pressure-on-intel-as-even-cutlery-gets-smart.html
News on Nook is not encouraging. There is so much turmoil in this market
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arnes & Noble Inc. shares fell Thursday after the retailer said that it expects losses from its Nook e-reader business to be larger in 2013 than last year.
The largest traditional U.S. bookstore has invested heavily in its Nook business as consumers increasingly shop online and read e-books. But the Nook faces tough competition from other devices like Apple's iPad Mini, Amazon's Kindle and Google's Nexus tablet.
Barnes & Noble said Wednesday after the market closed that it expects Nook media revenue of less than $3 billion. It also anticipates a loss for the unit from earnings before interest, taxes, depreciation and amortization to exceed the $262 million loss recorded in its 2012 fiscal year.
This follows a report from the retailer in January that its Nook unit revenue fell 12.6 percent to $311 million during the critical holiday period.
The company is scheduled to report its third-quarter results on Feb. 28.
Shares sank 93 cents, or 6.6 percent, to $13.27 in midday trading Thursday. Its shares have traded between $10.45 and $26 in the past 52 weeks.
Whether influenced by Microsoft (Nasdaq: MSFT) or not, Taiwan devices manufacturers are getting more stringent demands from chip giant Intel (Nasdaq: INTC).
According to Digitimes on Friday, Intel sent a notification to ODMs that all Haswell-based Ultrabooks should be equipped with a touch panel to qualify for subsidies on the processors.
Intel is making the move in anticipation that touch panels will be a necessary feature, but did not elaborate on the subsidies.
Two sides of the issue would be a stronger penetration of Ultrabooks, while the other side of the argument is that the higher prices will push consumers away.
Another issue still creeping up is quality. Yields on touch panels are still relatively low, causing a bottleneck in the supply chain. Digitimes' sources said that touchscreen notebooks are only expected to account for 10 percent to 15 percent of shipments in the second-half of 2013.
Microsoft's new Windows 8 platform is a great example. Coming out to mixed reviews, the new OS is designed mostly with a touchscreen in mind, like that of a tablet PC. Should Windows 8 be met with similar success of Windows 7, the progression to all portables having a touch panel will only be natural.
Shares of Intel are up about one percent on the session.
Intel Corporation (Nasdaq: INTC) will showcase leading mobile and communications solutions at Mobile World Congress 2013. In addition to the main Intel booth, the company will have a presence in the App Planet Exhibition and at the Vodafone* Booth in the GSMA Connected City.
Media, Blogger and Analyst Reception with Intel Executives * Feb. 25, 4 " 5 p.m. CET * Intel Booth, Hall 3, Booth #3C34
Intel will host a reception on Monday, Feb. 25 from 4 " 5 p.m. Intel executives, including Mike Bell and Hermann Eul, will be on-hand to showcase the latest devices based on Intel technology, discuss Intel s mobile strategy and progress toward expanding its presence in new and existing markets. Food and beverages will also be served at the reception.
Intel Booth
* Fira, Hall 3, Booth #3C34
* Feb. 25 " 27, 9 a.m. " 7 p.m. CET
* Feb. 28, 9 a.m. " 4 p.m. CET
* Intel will showcase how its products and technologies are transforming mobile experiences -- from turning big data into insights and business actions, to transforming networks, to delivering performance driven devices including smartphones, tablets and Ultrabooks targeted at a range of developed and emerging market segments.
* Specifically, Intel will showcase its latest smartphone technologies and devices running the Google (Nasdaq: GOOG) Android platform, including a new dual core, dual graphics platform, as well as OEM- and service provider-supported devices based on the company s new Intel AtomTM Z2420 platform targeted at emerging markets. The company will also showcase a range of Windows* 8 tablet and convertible designs that deliver a complete computing experience, and will also spotlight a range of top selling consumer devices based on the company s leading-edge wireless technologies.
Intel in App Planet
* App Planet Booth
* Fira, Hall 8.1, Booth #8.1E20
* Feb. 25 " 27, 9 a.m. " 7 p.m. CET
* Feb. 28, 9 a.m. " 4 p.m. CET
* Intel delivers software solutions and services that fuel the mobileworld. Learn about the tools and resources that help developers create the most innovative apps and the content that delights end users. Intel will feature demos on HTML5, perceptual computing, the latest mobile software development tools, Intel Cloud Services Platform and Telmap M8, Intel Developer Zone and Intel Common Connectivity Framework.
Intel in Vodafone* Booth, GSMA Connected City
* Fira, Hall 3, Booth #3B2 and 3C2
* Feb. 25 "27, 9 a.m. " 7 p.m. CET
* Feb. 28, 9 a.m. " 4 p.m. CET
* Intel is showcasing a simulated look at how everyday activities such as shopping, entertainment and social activities can be transformed when our digital lives are seamlessly connected as we travel between our homes, work and beyond. Intel s Intelligent System Alliance ecosystem and new wireless products will also be presented to demonstrate how connectivity is enabled.
I am surprised that Intel will allow this to happen. I know it is a rumor. Unless AMD was willing to cut Intel price at any cost.
How about the price advantage? It costs only $199.00. I am going to look into.
It beat due to lower tax rate and not due to better GM or revenue growth.
Finally, this has come out which has been speculation for so long.
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Intel (Nasdaq: INTC) signed Cisco (Nasdaq: CSCO) as a customer for made-to-order network chips. This would be Intel's biggest customer to date for its fledgling foundry business, Bloomberg reported citing two people with knowledge of the matter.
Refer to the comments-last man standing
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INTC Can Make Money Serving Apple, Others’ Chips, Says Credit Suisse
By Tiernan Ray
Credit Suisse‘s chip analyst John Pitzer this morning weighs in on the debate over whether Intel (INTC) could obtain more business manufacturing other company’s chips, including, perhaps, Apple‘s (AAPL) custom chips for its iPhone, iPad and iPod Touch.
Although Intel has only three small customers for its contract “foundry” service – Achronix, Tabula, and Netronome – nevertheless Pitzer sees great potential for Intel based on its technology lead in chip process technology, taking a much brighter view than many of his peers on the Street:
Moore’s Law – smaller, faster and cheaper – has been the cornerstone of Tech economics for 40 years. It is our view that technical, financial and scale issues are driving towards a “last-man-standing” advantage for INTC relative to Moore’s Law and that INTC will leverage that advantage not only in its core business but increasingly as a specialized foundry […] as INTC’s manufacturing lead continues to widen at 14nm and especially at 450mm, IFS will become a more meaningful driver of top and bottom line performance.
In particular, if Intel can grab Apple’s business from Samsung Electronics (005930KS), the economics could work out much more favorably for Intel than people suspect:
VBG, The same software groups endorsed Intel ATOM server product line. These companies will ride multiple horses. No surprises here.
Who is going to eventually be the leader, the only time will tell.
I am not asking you to give credit or blame this person. I stated my opinion. He is better than others where he has tried to explain his position. He is going to put what he knows.
It drives all Intel investors nuts but that is what you have in market place. ARM and its partners have announced plan to attack Intel with its 64 version chip. To them(so called gurus), that is enough to drive Intel down or Intel is in trouble.
At least this guy gives Intel enough credit where as others have come out openly that this will erode Intel margin. ATOM margins are no where close to Xeon. These other guys stated that this announcement is negative for Intel
Public website like Anand I believe are better places to do that.
It needs to be independent to some extent but yes Intel should beat its own drums.
At least this guy gets it. Intel wins with ATOM and or with Xeon.
With increased qty. Intel will be able to fill some of the factories. I understand the volume of ATOM servers are not huge.
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Intel’s Atom Server Chip a Broader Strategy, Says Wells; AMCC the One to Beat, Says Wunderlich
By Tiernan Ray
As I mentioned earlier today, Intel‘s (INTC) announcement yesterday of a new family of server chips, dubbed “S1200,” which are supposed to be more energy-efficient for large-scale data center servers, has sparked some debate among analysts as to whether the company is ahead of the competition using designs from ARM Holdings (ARMH), including Applied Micro Circuits (AMCC), Advanced Micro Devices (AMD), and Nvidia (NVDA).
The most positive remarks today came from Wells Fargo‘s David Wong, who rates Intel shares Outperform, with a $28 to $33 valuation range, noting that Intel has signed up Hewlett-Packard (HPQ), Dell (DELL), and China’s Huawei to use the chips.
The chips, starting at $54, are cheaper than Intel’s existing server processor offerings, but Wong thinks price difference can be more than made up for by volumes sold of the chips:
Intel presented a slide showing HP data indicating that the Atom S1200 chips deliver higher performance per watt than Intel’s Xeon E3 counterparts in light scale-out applications, while more compute intensive applications see higher performance per watt from Intel’s Xeon E3 processors than from the new S1200 processors. Another slide showed an example of how Intel might receive around $32,900 in revenue for a Xeon LV E3 server rack and around $35,800 in revenue for an Atom S1200 based server rack, suggesting that the ASP difference between the Xeon and Atom processors is more than offset by the 5x number of Atom processors per rack in a typical server rack configuration.
Intel has a technology edge, Wong believes, given its ready support for 64-bit instructions:
In offering a 64-bit Atom processor today, we think that Intel has a 1-2 year lead over any
competition that might come from an ARM-based processor. We do not expect
widespread availability of 64-bit ARM-based server chips till 2014 at the earliest.
More important, however, to Wong, is that investors have failed to grasp how these chips, based on Intel’s “Atom” architecture, fits into a broader strategy for Atom, which was originally just a smartphone chip:
This latest introduction of Intel’s Atom server chip is another step in the buildout of Intel’s strategy for Atom. Although Intel initially targeted netbooks as the main market for Atom, the company’s long-term strategy was always to add different types of circuitry to the Atom processor core to develop different types of system-onchip (SOC) products for various markets.