



The Incestuous World of Chip-sourcing


Moore's Law



Stagnant Revenue, Changing Market

Intel’s revenue growth has slowed dramatically since the beginning of the decade. Never mind the limits of integrated circuit density, has Intel come up against the limits of the growth to revenue? The people who run Intel are far from stupid, and the company’s transition from monolithic desktops to smaller devices has been underway for a while. Capitalizing on the leverage of its market-leading position, Intel has shifted its concentration to smaller devices and embedded systems. The latter refers to chips placed in something other than stand-alone computers, which can include everything from cars and planes, to traffic signals and factory assembly lines.

Like any corporation of its size ($205.7 billion market capitalization), Intel has an elaborate business organization. The company’s major divisions include the Client Computing Group; which includes desktop computers, notebooks, and tablets, the Data Center Group; which includes products for cloud communications and infrastructure, and the Internet of Things Group; which includes products designed for internet connectivity in areas like retail, transportation, industrial, video, buildings and smart cities. In addition to semiconductors and chips, Intel also produces security software products. 

PCs Still King

The era of the 30-pound table-mounted mini tower might be fading, but it’s still very much active and will be for a while. 55% of Intel’s operating revenue comes from its Client Computing business, a ratio that lowers gradually from one year to the next.

Dell Inc. is the company’s biggest customer, accounting for 15% of Intel revenue. Right behind at 13% is Lenovo Group Ltd., which bought IBM’s personal computer business in 2005 and immediately became a huge Intel client, almost by default. 

Intel grossed $62.8 billion in 2017. Its business is truly international, with the United States only its second-biggest market. The biggest customer is China, which bought nearly $14 billion worth of Intel products last year. The third-largest market is Singapore, which accounted for $12.7 billion of Intel's revenue. 

The Bottom Line

Some companies dominate an industry, fail to innovate, and fall into irrelevance (e.g. Howard Johnson, Kodak.) Others have great ideas but never manage to capitalize on them. The company that can leverage intellectual firepower with commanding market share is the company that can stay both powerful and relevant for decades. Intel is the archetype, and is situated to continue to be, well into the future.