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Monday, October 16, 2017
Memory Industry News
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Can Intel strive and grow in this new era?

Friday, August 18, 2017

Shares of Intel (NASDAQ: INTC) have lagged the market so far this year, as the chipmaker struggles with low PC sales and stiff competition in the central processing unit business from the likes of AMD. But the company's latest results clearly indicate that its pursuit of fast-growing opportunities is bearing fruit.

Intel beat expectations in the recently reported second quarter, posting 9% year-over-year revenue growth thanks to a massive jump in revenue from the non-volatile memory (NVM) segment. In fact, the chipmaker saw revenue gainsacross four of its five segments last quarter, including the Internet of Things (IoT) division and the data center business.

These segments could substantially boost Intel's growth in the long run, given the massive end-market revenue opportunity available. The company's internal analysis reveals that non-volatile memory and autonomous vehicles (included in IoT) together representa $200 billion revenue opportunity, but is it doing what's necessary to make a dent in these areas? Let's find out.

Intel's striking big in NVM

Intel's NVM revenue jumpedan impressive 58% year over year during the second quarter to $874 million. This segment accounts for just 6% of the company's revenue at present, but Intel believes it has great potential from a long-term perspective, as non-volatile memory could hita size of $100 billion by 2021.

More importantly, Intel has been riding with the right partner to make its presence felt in this space -- Micron Technology(NASDAQ: MU). The two companies have been working together for a long time, with Micron acting as Intel's flash foundry partner. Micron's expertise in memory chips has been a boon for Intel, enabling the latter to develop its 3D XPointtechnology that's expected to be more efficient when compared to traditional NAND and DRAM memory.

Intel is now sellingits 3D XPoint-based memory products under the Optane brand and has already landeda big cloud customer in the form of IBM. This clearly indicates that the chip giant is going to target cloud service providers to sell its NVM products, believing that it can plug the gap in data-center storage arising from the inefficiencies relatedto DRAM and NAND-based storage.

Intel's internal benchmarks already indicatethat Optane performs faster than its conventional storage devices for the data center. So it won't be surprising if the company lands more cloud customers in the future.

However, the chip giant isn't going to get a free run in this market. Partner Micron has already launcheda standalone product based on the 3D XPoint technology, known as QuantX. Just like Intel, Micron will also be targetingdata-center applications with this product, with sales expected to begin in the second half of 2017 and hitting critical mass in 2019.

Intel can expect stronger competition from memory industry giants such as Samsung, which is ready to rampup 3D non-volatile storage from a new generation fabrication line that was completed earlier this year. Therefore, Intel investors will need to keep a closer eye on the competition and the potential impact that it might have on its non-volatile memory sales over the next few months.

The automotive opportunity

The other $100 billion revenue opportunityIntel is targeting is in autonomous cars. The chipmaker forecasts that autonomous cars will be a strong revenue channel by 2030, and Intel wants to maximize the potential by providing end-to-end self-driving-car solutions at a low cost.

The company has started working toward its goal of reducing the time to market for automakers by acquiringMobileye, with the acquisition set to be completedin the current quarter. In addition, Chipzilla has sewn together an alliance that includes BMW and Delphi Automotive in a bid to accelerate its self-driving platform development.

The good news for Intel investors is that the alliance has already made some headway into autonomous cars. Delphi, for instance, helpedan Audi SUV negotiate dense traffic in Silicon Valley back in May using Intel's self-driving-car platform. Intel now wants to go further, so its automotive alliance will start testing40 cars by the end of the year.

In addition, Intel's other acquisitions, such as that of Nervana Systems, Movidius, and Altera should fill in the other pieces of the self-driving jigsaw puzzleas they focus on different areas such as deep learning and vision-based sensors.

However, investors shouldn't forget that Intel will run into NVIDIA in this space. The graphics specialist is currently working on its next-generation self-driving platform and plans to deliver Level 4 autonomous technology (which needs human intervention only in some circumstances) by nextyear. What's more, Tesla is already using NVIDIA's self-driving technology across its model lineup, indicating that Intel is currently behind the curve in this space.

By: DocMemory
Copyright 2017 CST, Inc. All Rights Reserved

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