Intel (Intc) is located in the middle of one of the most tumultuous periods in the 56-year history. Falling sales, missed opportunities to compete in the AI space and a huge turning effort of CEO Pat Gelsinger who wants to return the company to its former glory, turn considerable pressure on the Bottom line of the chip giant and the share race.
And things for the company only become more interesting.
Last Monday, Intel announced that it had signed a deal with Amazon (AMZN) to build adapted chips for Amazon Web Services, a positive sign for the emerging third -party company of the company.
Subsequently, the Wall Street Journal reported on Friday that Qualcomm (Qcom) contacted Intel about a blockbuster -deal that would give Qualcomm a larger foot in the PC and AI spaces. That’s not all. On Sunday, Bloomberg reported that Apollo Global Management (APO) offered to make an investment of millions of dollars in Intel to keep Gelsinger’s reversal forward. (Publication: Yahoo Finance is owned by Apollo Global Management.)
It is a lot to follow and even more to have some feeling. Fortunately I am here to break it all for you.
Intel has to do with sliding sales and the non -enviable position to assume market leader Nvidia in the AI room. For 2023, Intel reported a turnover of $ 54.2 billion, a decrease of 14% on an annual basis compared to the $ 63.1 billion that the company saw in 2022.
That included a decrease of 8% in Intel’s Client Computing Group, which sells chips for PCs; A 20% decrease in data center and AI turnover; And a decrease of 31% in network and edge sales. Intel, however, reported an increase of 103% in its Intel Foundry Services, but that was only $ 952 million.
Intel CEO Pat Gelsinger gives a speech on the Computex Forum in Taipei, Taiwan 4 June 2024. (Reuters/Ann Wang/File Photo) ·Reuters / Reuters
Part of the misery of Intel originated from the fact that the explosion in PC sales at the start of the Pandemie has sent the client computing group income for various quarters, creating a tree and bust. Consumers bought new computers in large numbers for work and games and sent the income of Chip income. But millions of consumers usually do not buy new PCs at the same time. With so many people who had new computers, there were fewer consumers looking for upgrades and the sale went an extensive slump in those shipments that felled eight consecutive quarters.
However, the sale goes on again. In July IDC said that the PC market grew by 3% in the second quarter, which recorded a second consecutive quarter of growth. But the industry still has a way to go.
At the same time, Intel is confronted with a new threat from Qualcomm, which started his Snapdragon X Elite and X Plus chips in Windows PCS earlier this year as an alternative to the Intel processors. These chips offer improved performance and strength versus Intel’s older supply and are intended to compete with the exceptional M -family of Chips from Apple (AAPL) that feed the MacBooks of electricity.
However, Intel fights back. Earlier this month, the company showed its Ultra 200V line from processors that it says it can surpass the Chips of Qualcomm.
PC sales flags also influenced graphic giant Nvidia (NVDA), in which the sale of graphic chips of the video game deteriorated after the pandemic tree. But the company, in contrast to Intel, has succeeded in using early investments in AI to take advantage of the increase in interest caused by the debut of OpenAi’s Chatgpt in November 2022.
That helped Catapult Nvidia to the vanguard of the semiconductor industry and sent its shares to extraordinary new heights, with more than 860% in the past two years and 191% in the past 12 months.
Intel works to try to catch Nvidia with his own Gaudi line from AI rapiders. On Tuesday, the company debuted its latest Gaudi 3 AI Accelerator and announced that IBM will use it as part of its IBM Cloud offer.
But with Gartner that estimates that Nvidia checks more than 70% of AI chip sale, it is a tough fight.
Intel also fights for position as a chip manufacturer for external customers. The plan is that the company’s foundry activities operate as a subsidiary of Intel who builds processors for customers who are looking for an alternative to TSMC, one of the largest chip makers in the world
But the Buildout is expensive and Wall Street is not fully sold on the idea. Analysts from Citi Research have said that Intel should completely leave the foundry company, so that it can improve margins and profit per share.
In September, however, Intel announced a deal of millions of dollars to “produce an AI fabric chip for AWS on Intel 18A, the most advanced process junction of the company.” The company is also set to build a modified version of its Xeon 6 -chip for Amazon.
The news comes after Intel announced that Microsoft signed up as a production customer in February. Two large companies are certainly a start for Intel, but it will have to sign a whole series of customers if it hopes to grow his production segment to match competing chip manufacturers.
Intel’s PC and AI -exciting have left it as a potential takeover objective, where Qualcomm and Apollo enter the mix. According to the Wall Street Journal Intel, Qualcomm wants to buy, although it is unclear whether the company would retain all Intel segments or would sell parts of its business segments. The deal will certainly generate many antitrust problems, because the companies are two of the most important chip companies in the US.
In the meantime, Apollo seems to favor Gelsinger’s plans and can invest Intel up to $ 5 billion to follow the effort, Bloomberg reports.
Now investors will have to wait and see if Intel will continue with a company or keep trying to do it alone.
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E -Mail Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter @DanielHowley.
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