Electronic enthusiasts eight o'clock: Intel announced the acquisition of Mobileye, the world's largest supplier of advanced driver assistance systems (ADAS), for more than $15 billion. The industry seems to be full of confidence in the layout of Intel in driverless driving. Since its inception in 1968, Intel has created brilliance in several areas, including DRAM, PC processors and server chips. Every time the industrial transformation, Intel can almost grasp, and use its strong manufacturing and design capabilities to become the leader. However, there is one exception in the field, that is, the era of smartphones pioneered by Apple.
Due to the slow response and miscalculation of the mobile market, Intel missed the mobile market of the Golden Year and created the glory of a number of vendors such as ARM and Qualcomm. But in the last two years, Intel has made a comeback. After cutting off the mobile product line, Intel will focus on the Internet of Things, 5G, artificial intelligence and automotive electronics, through a large number of acquisitions and internal research and development dual layout, and strive to seize the next wave of the blue ocean market. This time, can Intel get what it wants?
Intel and its major business transformation
After a record revenue in FY2016, Intel (INTC) shares rose to a peak of $38.45 in 52 weeks on January 27, 2017. Then began to slide. Strong returns cannot maintain high stock prices because prices are largely determined by future growth opportunities rather than past growth.
Intel is experiencing a major transformation from a chip-centric company to a data-centric company. It invests in things that produce data or that need to calculate data. So 2017 may not belong to Intel.
Potential market reach for Intel expansion in 2021.
Intel's transformation began in 2016, when it was reorganized, business executives were changed, and 12,000 people were laid off. The transformation will go a step further in 2017 with its 10nm (nanometer) products coming out, launching Optane products, AI (artificial intelligence) products, advanced mobile modems, and IoT products.
From the current action, Intel is expanding its TAM (potential market range) from $45 billion centered on PC (personal computer) and server CPU (central processing unit) to PC, data center, NVM (non-volatile Sexual storage), mobile devices and the Internet of Things, totaling $220 billion.
This transformation allows Intel to compete directly with NVIDA, QCOM and AVGO in the data center, mobile and networking markets.
Analysts and investors believe that the growth of the Internet of Things, Memory and PSG (Programmable Solutions Division) still accounts for only 11.6% of its revenue. Even in the data center segment, this segment accounts for only 29% of revenue and 58% of revenue. High-margin enterprise products are declining, and low-margin cloud and network products are growing rapidly.
These growth links require huge investments that hurt the company's profits. In the next three years, Intel expects its gross margin to decline slightly, its revenue to increase at a low single digit, and its EPS (EPS) will grow faster than its operating income.
In 2017, Intel's competitors AMD and NVIDIA will launch a new generation of products with strong growth opportunities. NVIDIA can benefit from the Tesla (TSLA) car installation autopilot platform. AMD can benefit from its Ryzen CPU, and for many years he expects to gain some market share from Intel in the PC and server markets.
From this perspective, the 2018 fiscal year looks relatively better for Intel because its product transformation is beginning to produce results. We will explore the short- and long-term growth opportunities and risks Intel faces.
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