The intelligence inside your computer could very well be Intel. The company -- which holds about 80% of the market share for microprocessors that go into desktop and notebook computers, smartphones, tablets, and computer servers -- is #1 in the manufacturing of semiconductors. Intel also makes embedded semiconductors for the industrial, medical, and in-vehicle infotainment markets. In 2013 the company introduced its new Haswell processor micro-architecture used to design its chips; the new technology boosts CPU performance and reduces the amount of power consumed. While most computer makers use Intel processors, PC giants Dell and Hewlett-Packard are the company's largest customers.
Intel has more than 150 locations around the globe with assembly and test facilities located in Costa Rica, China, Malaysia, and Vietnam. Singapore and Taiwan generate 24% and 17% of Intel's total sales, respectively. The US accounts for 16%.
Intel 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's product groups focus on its core architecture and manufacturing operations within specific markets. The groups are aligned with the end uses for its products -- PC Client, Data Center, Intel Mobile Communications, Intelligent Systems, Netbook and Tablet, Phone, Non-Volatile Memory (including NAND products), and Software and Services (including McAfee and Wind River Software).
In addition, Intel has stepped up its R&D efforts -- its "tick-tock" technology development -- with plans to release a new microarchitecture for its flagship PC processors every two years while ramping up its development of next-generation silicon manufacturing processes in intervening years.
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 2012 Hewlett-Packard accounted for 18% of the company's sales, while Dell contributed 14% and Lenovo accounted for 11%. Intel paid $2 billion in advertising expenses during 2012.
For 2011 Intel reported record sales -- the company broke the $50 billion mark for the first time in its history. Sales overall were up 24% in 2011 over 2010, due to higher unit platform sales and higher average selling prices for the year. However its revenues dipped slightly from $54 billion in 2011 to $53.3 billion in 2012. After recognizing record profits of $12.9 billion in 2011, Intel saw its profits fall 15% to $11 billion in 2012.
Its PC Client Group was negatively affected by the worldwide growth of tablets. The profit decrease was mostly due to higher operating expenses, especially the research and development costs associated with developing its products for smartphones and tablets.
In 2012 the company announced it had entered into several partnerships that will bolster its new Atom (previously code-named Medfield) wireless chip for the smartphone market. Visa, ZTE, Lava International, and Orange are among the companies Intel is working with. In fact, ZTE and Lava are two of the biggest players in two of the biggest markets in the world: India and China. Visa plans to collaborate with Intel to ensure consistent and secure transactions across Intel Atom-based smartphones and tablets by including the Intel Smartphone Reference Device in its payWave mobile payment system. The company is challenging the dominance of ARM-based chips, which are widely used in smartphones and tablets. Intel has used acquisitions to add a competitive communications chip to its portfolio.
Mergers and Acquisitions
Intel paid about $638 million for 15 acquisitions during 2012. It bought the wireless unit of Infineon for about $1.4 billion in cash in 2011. The acquisition was part of Intel's strategy to move beyond its computer chip business by adding an established portfolio of chips for smartphones and other wireless devices. The unit's chips are used in products that include Apple's iPhone. Intel's move into chips for smart devices was bolstered by another acquisition that year, when it bought Silicon Hive (a spin-out from Philips Electronics) from venture capital firm New Venture Partners. Silicon Hive develops system-on-chip (SoC) technology for multimedia applications; its technology will help Intel expand its Atom processor-based chips into multimedia and imaging applications for mobile devices.
Intel also purchased security software provider McAfee for about $7.68 billion in 2011. The deal, which marked Intel's most significant foray into the world of software, was part of a push to offer clients a comprehensive package of hardware, software, and services for growing industries such as mobile computing and Web-connected devices, especially in the data center sector. McAfee operates as a wholly-owned subsidiary that reports to Intel's software and services group.
In a much smaller deal the same year, Intel acquired Fulcrum Microsystems. Fulcrum designs integrated, standards-based 10GbE (Gigabit Ethernet) and 40GbE switch silicon for data center network providers to support cloud architectures and converged networks. Also in 2011 it paid $300 million for Israeli location and navigation company Telmap to expand its mobile capabilities and offer location-focused API tools for its AppUp developer program. In 2012 it geared up its networking arsenal further when it bought QLogic's InfiniBand product line of switches and adapters and certain assets related to that business. Intel sees the purchase as essential to achieving fabric architecture development of ExaFLOP/s performance (the next order of magnitude above PetaFLOP/s) by 2018.