Intel's Computex honeymoon unlikely to last, says analyst

Intel's Computex honeymoon unlikely to last, says analyst

Summary: An analysts argues that Intel's chip developments at the Computex show this week are a good step, but can't slow the march to cheap processors that will hurt the chip giant's profitability.

SHARE:

As the barrage of processor news from Intel this week at Computex fades, the reality of a commoditized semiconductor market will again start to hit home.

2013-06-0414-55-11-200x219

Piper Jaffray analyst Auguste Gus Richard, who has been critical of Intel's business model and mobile prospects, cut his estimates, rating, and price target on the company's shares. The big problem: The PC market forecast as well as ARM, which will at the very least ensure Intel makes little money on the mobile front. Intel's Haswell and Silvermont platforms are promising, but only go so far. Richard said:

We are lowering our PC forecast (down 6.9 percent in 2013 from down 2.9 percent) and believe current demand is channel fill. Tablets and smartphones, other components and capabilities (displays, cameras, apps etc.) are taking attention and dollars away from the CPU. Additionally, an army of ARM-based suppliers have come to market commoditizing the processor market. Leading smartphone and tablet vendors are also using internally-designed ARM-based CPUs and now low-end CPUs are available for as little as $4.

The week in Computex: 

PC industry pushes 2-in-1 hybrid devices: You buying? | Inside Samsung's Galaxy Tab 3, an Intel chip | Could price be Haswell's Achilles' heel? | Intel bets on better battery life as the killer next-gen Core feature | ARM: A 'generation ahead' of Intel? | Intel's Haswell launch may take backseat to Atom vs. ARM | Computex 2013: Intel makes case for Atom in tablets and smartphones | Computex 2013: Intel announces Haswell for 2-in-1 devices, fanless Core-powered convertibles | Intel aims to reboot PC market with Haswell, ultrabooks and two-in-one devices

Richard noted Intel's Silvermont platform, a new Atom architecture aimed at ARM, will hurt Haswell more than it does ARM. Overall, Intel will see lower profit margins. Richard noted:

Haswell will no doubt improve battery life and Windows Blue or 8.1 will be an improvement over Windows 8. We don't think it is enough though. These efforts are likely to be too late in the year to drive real growth in PCs in CY13 or 1H:14. We expect to continue to see tablets taking shares from notebooks with the desktop market remaining stagnate. While Intel will gain a toehold in the tablet market with Silvermont, it is likely at the expense of notebook sales.

Not all analysts are down on Intel, but it's clear that the debate on the chip giant's prospects are going to resume again post-Computex. Richard Whittington, an analyst at Drexel Hamilton, said it's clear that Intel is in better mobile shape than a lot of people thought. Intel's Atom will power Samsung's Galaxy Tab 10.1 and that's a big win.

Intel's "mobile success is far from certain, but the company's next-gen Atom chips can get a phone and tablet foothold if Samsung cannot make 20 nanometer mobile ARM chips," said Whittington.

Topics: Processors, Hardware, Intel, Mobility

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

13 comments
Log in or register to join the discussion
  • Exactly

    Intel's forecast in the tech world is dim due to the move to low power devices and cheap CPU/GPU combinations. There is no room for a player with $600 CPU only chips with little to no other offerings. The prices of their chips are the same as the prices of the devices that we buy these days. The only devices using any of their chips these days are ones that are basically subsidized by intel themselves or sold at deep discounts to insider buyers. Over the next year AMD will be releasing x86-ARM hybrid SoC's with even better battery life and then where will Intel be..
    Jimster480
    • Where to do you get your data?????

      Intel's chips are generally much cheaper than that. i7 Haswell for $320. An upper end i5 can be had for $170. Atoms can be had for $27.

      And you get much higher performance.

      As for AMD, intel has been staying ahead. Don't forget tick-tock. New features then shrink
      MeMyselfAndI_z
      • $27 for an Atom APU?

        Where did *you* get your data?
        Panoplos
      • bull when i see it.

        pricing not out yet dude for Intel just went to see about shipping and cost not available till release date so the numbers you and others are quoting are more bull. the others are any one other then Intel. any one.
        sarai1313@...
    • Well, not EXACTLY, my friend...

      This is what the argument sounds like to me:
      Intel is dominating the (shrinking) high-end Market, while ARM based devises dominate the (growing) low end Market.
      So now, when Intel is getting into the low end market, it will cannibalize… itself???
      If you want to understand how wrong you are, Just take a peek at the Intel UltraBook adds on this page (“ultrabook putting the class in business class” & “get the ultrabook that fits your business”) to understand the differentiation that Intel is making.
      By the way, what do you have to say about the Clovertrail+ that is manufactured on the (relatively) old 32 nm node and yet, doesn’t fall much from the top-of-the-class ARM designs?
      22nm silvermont will be ready towards the end of the year, and 14nm products will come out 1H 14. It will only be Intel to decide when they choose to use this huge advantage on their low-end mobile designs.
      Timtumon
      • Funny, that...

        Why is Intel having to pay for advertising for Ultrabooks? Could it be because they are hurting in a quickly shrinking market?

        Clover Tail+ Atoms are not SoC, which means you have to put out more for BB + connectivity. The solution will not be tenable for the market they are going after.
        Panoplos
    • $200 TABLETS

      Jimster,

      You can't sell a tablet for $200 that has a $600 processor. The BayTrail chips will power $200 tablets according to Intel's announcement at Computex. The Acer is being shown at a list price of $380 including Windows 8.1 and the Home and Student version of Office. The Android version using the same quad core BayTrail is quoted at $200
      mswift@...
  • Quality costs

    Hi :)
    Quality costs. They are facing a serious challenge from the "Stack'em high, sell'em cheap" but they have a huge and well deserved reputation for quality. Lets hope they can use that to good effect. (and maybe bring out a few lines of cheaper ones to compete)
    Regards from
    Tom :)
    Tom6
  • Another analyst who is trying to prove he's as smart as a 5th grader.

    Intel is the one with the bright future as the key benefits of their chips breakthrough technologies will not be surpassed well into the future.
    Combining major increases in computing and graphics power with reduction in size and power usage will easily keep them on the top of the heap for quite some time.
    sickntired44
  • Lack of Analysis

    I must say I expect more from Piper Jaffray than the justifications given here. Company with great core fundamentals finally starting to show it has a chance to penetrate the tablet space and they downgrade, sounds like they have clients over invested in ARM.

    No comments on Foundry business, nothing on its new LTE chipset, nothing on the breakthrough of Android on Intel, nothing on the smaller topologies resulting on more die's per wafer, nothing on 450mm wafer investment. Fine PC's are a big chunk of their revenue, but as an investor I want an analyst that is going to tell me what to invest in before the results so I can get in low. Looks like Piper Jaffray has done little analysis just regurgitate the same old story.

    Would love to look back at Auguste Gus Richard's analysis a year from now.
    WhatdidIdonow
    • Re: Would love to look back at Auguste Gus Richard's analysis a year from n

      Or, just look at Intel's grandiose predictions from five years ago, when it first introduced the Atom product line.

      It's been struggling since then.
      ldo17
  • Piper Jaffray accuracy of predicting share price is awful

    Using their own website to track the accuracy of their predictions shows what an awful job they have in predicting Intel.

    Just plug INTC into their site.
    https://piper2.bluematrix.com/sellside/Disclosures.action

    Once the market moves they have a 50% chance of predicting the right swing.
    WhatdidIdonow
  • the Wintel golden years of huge profit margins are gone

    ARM has become the true competition to Intel that everyone hoped AMD would become. that doesn't mean though that Intel is doomed to fade away. they still make damn good chips, their energy efficiency is getting better by leaps and bounds, and haswell and bay trail will be huge competition to ARM. competition means we consumers get better devices for cheaper. we should cry because they have to actually compete now.
    theoilman