At last week’s Consumer Electronics Show in Las Vegas, Intel formally launched 27 new processors produced with the 32 nanometer process technology. It also demonstrated the LG GW990, a smartphone built with the company’s yet-to-be-released Atom Moorestown platform.
This marks Intel’s first attempt to crack the smartphone market. According to Gartner, by 2013, mobile phones will overtake PCs as the most common way to access the Web. The number of PCs in use will reach 1.78 billion while the number of smartphones and Web-enhanced phones will be 1.82 billion by the same year.
In my recent EE Times op-ed, I said that it is only a matter of time before Intel turns out compelling low-power processors for smartphones. Moorestown, Intel claims, will consume 10 times less power than the Atom or any other processor on the market while running and up to 50 times less power when idle. Moorestown also supports Moblin OS, Intel’s Linux-based OS for netbooks and high-end smartphones.
Qualcomm dominates the smartphone processor market with its ARM-based chips. ARM made a recent foray into the netbook market and is perceived as a threat to Intel’s dominance of it. Guest author Nalini Kumar Muppala recently looked at their rivalry in his series, Intel vs. ARM.
Will Intel be able to challenge ARM’s dominance in smartphones? Since the arrival of the iPhone in 2007, the smartphone market has become highly coveted for competitors, which has increased price pressure on components. Intel might not be able to win the low-margin game, but I bet in favor of its technical capabilities over the long term.
Intel (NASDAQ:INTC) is the first major technical company to report its results this quarter. Intel was expected to report a strong quarter as the PC market rebounds, but the company went beyond this to squash even the most upbeat estimates.
Q4 revenue was up 28% y-o-y and 13% q-o-q to $10.6 billion. Net income was $2.3 billion or $0.40 per share, up an incredible 875% from $234 million or $0.04 per share last year. Analysts expected earnings of $0.30 per share on revenue of $10.17 billion. Q3 analysis is available here.
For the full fiscal year 2009, Intel posted revenue of $35.1 billion, a decline of 7% y-o-y. Net income was down 17% to $4.4 billion or $0.77 per share. The company generated more than $11 billion in cash from operations and paid cash dividends of $3.1 billion. Gross margin was a record 65%, up from 58% last quarter, as a result of lower inventory write-offs, improving costs, and a shift in product mix, which included the first products manufactured on Intel’s 32 nanometer process technology.
Gross margin was 56% for the full year, and for 2010 Intel expects the midpoint of gross margin range to be 61%. The number of employees decreased by 1,000 in the fourth quarter due to planned factory actions announced earlier. Intel ended the quarter with $13.9 billion in cash, $1 billion more than in the third quarter. Intel paid nearly $800 million in dividends and purchased $1.1 billion in capital assets. During the quarter, the company also paid $1.25 billion to AMD for dropping its antitrust lawsuits.
By region, revenue from Asia-Pacific was up 47% to $5.96 billion and the Americas grew 34% to $2.1 billion while revenue from Europe declined 6.7% to $1.52 billion. Intel experienced strong demand for its latest generation of processors for both PCs and servers, which led to a sequential increase in the ASP.
By division, over the third quarter, PC Client Group revenue grew 10%, Data Center Group revenue 21%, and Other Intel Architecture group revenue 22%. Microprocessor revenue (excluding Atom) grew 42% since the market bottomed in the first quarter. Revenue from Atom microprocessors has increased 5.5% q-o-q to $438 million in the quarter and $1.4 billion in the full year. In December, Intel launched a new Pine Trail Atom platform for which it has over 80 design wins from OEMs like ASUS, Acer, Lenovo, Dell, Toshiba, and Samsung. In the embedded space, it has over Atom-based 600 design wins and about 230 customers, 93 of which are new customers to Intel. The major clients for Atom processor have been with Acer, ASUS, Dell, and HP, and Intel commands more than 80% of the market.
Over the next three months, the company is planning to refresh its entire server product line with the new 32 nanometer Xeon in the single, dual, and multiprocessor segments.
For the first quarter, Intel expects a seasonal decrease in revenue. Revenue is expected to be in the range of $9.3 million to $10.1 billion. The stock is currently trading around $21 with market cap of about $118 billion. It hit a 52-week high of $21.27 on October 14 after the earnings release.