Intel has followed the law -- Moore’s Law, that is -- to the top spot in manufacturing and selling semiconductors. Company co-founder Gordon Moore determined in 1965 (making 2015 the 50th anniversary of the law) that microprocessors would regularly get more powerful, smaller, and less expensive. Intel has followed that formula to grab about 80% of the market share for microprocessors that go into desktop and notebook computers, smartphones, tablets, and computer servers. The company also makes embedded semiconductors for the industrial, medical, and in-vehicle infotainment markets. The company’s technology roadmap calls for releasing a new Core processor and a Xeon processor every two years. Most computer makers use Intel processors. In late 2015 Intel bought chipmaker Altera for $16.7 billion.
Intel is, indeed, inside millions of personal computers and that's why is PC Client Group segment accounted for 62% of the company's revenue in 2014. The Data Center Group brought in 26% of revenue. A third segment, the recently organized unit devoted to processors and software for the Internet of Things, was responsible for 4%.
The company's subsidiaries include Shiva Corporation, Chips and Technologies, Intel Technology India, Intel Corporation UK, Intel China, Wind River Systems, McAfee, IM Flash Technologies, and Havok.com.
Intel has more than 150 locations around the globe with assembly and test facilities in Costa Rica, China, Malaysia, and Vietnam. Singapore and China generate 21% and 20% of Intel's total sales, respectively. The US accounts for 17%.
Sales and Marketing
Intel sells its products primarily to OEMs and original design manufacturers (ODMs). ODMs provide design and manufacturing services to branded and unbranded private label resellers. In addition, Intel products are sold to makers of a wide range of industrial and communications equipment.
Its customers also include those who buy PC components and other products through distributor, reseller, retail, and OEM channels. Intel's worldwide reseller sales channel consists of thousands of indirect customers (systems builders that purchase its microprocessors and other products from their distributors).
In 2014 Hewlett-Packard accounted for 18% of the company's sales, while Dell contributed 16% and Lenovo accounted for 12%. Intel's advertising expenses were $1.8 billion in in 2014.
After two years of declining revenue and profit, Intel reported growth in both in 2014. Revenue increased 6% to nearly $56 billion for the year, a record high. Intel's traditional PC and server businesses had higher sales as worldwide PC sales stabilized. Sales for the mobile and communications segment, however, dropped 85% in 2014.
Higher revenue translated into a 22% increase in net income of $11.7 billion for 2014. A turnaround in interest on other income also helped push profit higher even as the company had operating expenses that were $1 billion higher in 2014 from 2013.
The company's cash flow from operations was 2% lower in 2014 with higher receivables and a decline in accounts payable.
While Intel has long dominated the chip market for personal computers and servers, it was late to the game for smart phones and tablets and that cost it sales and profit. The company is looking to catch up in mobile and establish leadership in other areas such as the Internet of Things and cloud computing.
In addressing the mobile market, the company released its M Core family of processors, which boost graphics and battery life. Intel shipped 40 million processors for tablets in 2014, better than its goal for the year. For 2015, it will introduce its SoFIA system-on-a-chip for mobile.
In late 2014, Intel announced its Intel IoT Platform, a platform designed to unify and simplify connectivity and security for the Internet of Things (IoT). The company drew on software developed by its recent acquisitions Wind River and McAfee, for the platform. The platform is to make it easier to develop applications and to connect the “things” effectively and securely with the Internet.
In its main processor business, Intel’s has released and is nearing release on several rounds of processor upgrades that offer higher performance while using less energy. They include the Intel Xeon E5 and Xeon E7 processors as well as the Intel Xeon Phi coprocessors. The Phi coprocessors are designed to act as power boosters in supercomputers, enabling trillions of calculations per second.
Mergers and Acquisitions
The acquisition of Altera provides Intel with key technology for dealing with data center, cloud, and the Internet of Things. Altera makes chips that can be reprogrammed after installation. Intel will combine its powerful Xeon processors, which handle dedicated tasks, with Altera's more chips, to give customers more flexibility.
In 2105 Intel completed the acquisition of Lantiq, a supplier of broadband access and home networking technologies. With the acquisition, Intel moves further into DSL and fiber markets.
For 2014 Intel spent $963 million on eight acquisitions. The biggest was the $650 million purchase of the Axxia networking business of Avago Technologies. The Axxia acquisition is intended to quicken Intel's push into mobile wireless base stations. In 2013 Intel shelled out about $925 million on a dozen companies. With Stonesoft, Intel will expand its network security products.