SWOT Analysis of Intel | How is the Business Model of Intel | How Does Intel Make Money?

 

1. What is Intel?

Intel is a semiconductor manufacturing company headquartered in Santa Clara, California. Robert Noyce and Gordon Moore founded it in the year 1968.

The current CEO of the Company is Patrick P. Gelsinger.

Intel provides microprocessors to computer system makers such as Lenovo, HP, and Dell.

Intel also makes motherboard chipsets, network interface controllers, integrated circuits, flash memory, graphics chips, embedded CPUs, and other communications and computer equipment.

2. How is the Business Model of Intel?

The business model of Intel corporation is to provide the semiconductor industry with innovative and value-enhancing semiconductor products and services, to out-innovate competitors, and to maintain strong customer relationships. Intel is the leading chip design company in the world.

Intel provides a wide range of semiconductors that power computers, servers, wireless networks, and automobiles.

The business model of Intel is mainly  based on the following categories:

a) Client Computing Group: This is a group that makes processors for client computing which includes Ultrabooks, All-in-one computers, tablets, and notebooks. The segment delivers client computing end-user solutions. Its primary focus is upon the higher growth segments

b) Data Center Group: This group makes processors for servers and data centers. Among the main customers of the DCG segment are cloud service providers, enterprise and government, and communications service providers.

c) Non-volatile Memory Solutions Group: In this group, the major task of this group is to make NAND flash memory chips and FPGA chips. The customers of this segment are enterprise and cloud-based data centers, users of business and consumer desktops and laptops, and a variety of Internet of Things application providers.

d) Internet of Things Group: This is a group that makes processors for wireless communications. The customers of IOTG include retailers, manufacturers, health care providers, energy companies, automakers, and governments.

Through its IOTG services, Intel helps its customers create, store, and process data generated by connected devices to accelerate business transformations customers of IOTG include retailers, manufacturers, health care providers, energy companies, automakers, and governments. Through its IOTG services, Intel helps its customers create, store, and process data generated by connected devices to accelerate business transformations.

e) Programmable Solutions Group: The major responsibility of this group is to make programmable chips for enterprise servers and embedded systems.

f) Intel Security Group: This group makes security software products.

3. How Does Intel Makes Money?

The Intel Company Intel is the world’s largest manufacturer of semiconductor chips. The company operates out of its headquarters in California. Intel is best known for its processors. The company makes most of its revenues primarily from the sale of chips.

The company also sells network infrastructure products. Intel reported profits of $8.8 billion in 2017. Intel primarily makes money by selling computer chips. The company does, however, sell network infrastructure products as well.

Intel makes money in the following ways;

a) Services: This is the main money-making business for Intel. It includes products and services such as Software Services, Services for Business Critical Applications, Services for Communications Networking Infrastructure, and Service Delivery Centers.

b) Licensing of Technology (Non-compete, royalty, and other): This is the technology developed by Intel’s research efforts that allow companies to make the product using this technology.

c) Sales, Marketing, and Manufacturing: Intel sells its products to computer motherboard manufacturers who use it to make their PCs.

Intel generates revenues primarily through the sales of its products.

4. Intel Business Strategies and Plans

Intel has its in-house research in the computing industry.

a) Intel’s in-house research in the computing industry consists of facilities devoted to computer processor development, manufacturing, and research. The facilities that consist of Intel Research include fabs, datacenters (datacenters), field laboratories (field facilities), offices, and regional laboratories.

b) Empowering Future with Strategic Propositions: The firm will continue to supply the goods and technology that form the cornerstone for global innovation, thanks to its production and technical capabilities. It also seeks to provide its clients and consumers with the most innovative and engaging technological experiences possible by utilizing new-age drivers.

c) Marketing Strategy for Process Technology: the Company’s goal is to provide computers with less power consumption using necessary technologies.

d) Creating Value through Capital Strategy. Intel is dedicated to fulfilling its corporate duty to produce value for its investors by reducing risks, lowering costs, developing brand value, and expanding into new markets.

e) Strengthening Core with Diverse and Inclusive Talents: Invention, product leadership, deliberate leadership in corporate governance policies, and engagement with suppliers, consumers, regulators, and local communities are all part of the Intel culture, which leads to the creation and deployment of sustainable business practices.

5. Revenue and Financials

Intel’s revenue in 2020 was increasing US$77.87 billion with an operating income of Increase US$23.68 billion; the Company also has a net income of decrease US$20.9 billion.

The total assets of the Company increased to US$153.09 billion with total equity of Increase US$81.04 billion. The Company has 110,600 employees as of 2020.

6. Competitors of Intel

The company mainly competed with the companies which are listed below:

a) Advanced Micro Devices: Advanced Micro Devices, Inc. (NASDAQ: AMD) is one of Intel’s major competitors. Advanced Micro Devices globally serves the computing and graphics markets with AMD Ryzen, Epyc, and Radeon products.AMD Ryzen, Threadripper, and Epyc CPUs help gamers, creators, and professionals achieve their vision.

b) NVidia: NVidia Corporation (NASDAQ: NVDA), founded in 1993, is a company that mainly produces graphics processing units – GPUs for consumer and enterprise markets.

c) Samsung: Samsung Electronics, founded in 1969, is a South Korean electronics company that provides electronics products such as semiconductor devices, displays, memory chips, flash memory, and system LSI chips. Its main products are televisions, smartphones, and home appliances.

d) International Business Machines (IBM): IBM is a multinational computer technology company headquartered in Armonk, New York. IBM’s only business is designing, developing, and selling high-end computers, hardware, and software systems.

e) VIA Technologies: VIA Technologies, Inc. is a technology company that develops multi-core embedded processors. Under the VIA brand name, it also provides graphics processing units (GPUs) and application processors for computer systems.

f) Qualcomm: Qualcomm is a multinational semiconductor company that specializes in the research of electronic components for mobile telecommunication, high-speed internet, laptop, tablet, and other devices.

g) Toshiba: Toshiba Corporation is a Japanese multinational conglomerate corporation. The company is based in Chuo-ku, Tokyo, Japan. Their products range from communications systems to industrial equipment, semiconductors to consumer appliances.

7. Partners of Intel

a) AxxonSoft: AxxonSoft is a company that provides solutions for businesses of all sizes.AxxonSoft products help customers to respond faster. The AxxoSoft business model is a subscription-based product pricing method. The AxxoSoft business model is a subscription-based product pricing method.

b) Sogeti: Sogeti is a company that provides the best IT services. Sogeti helps to transform organizations into digital businesses, delivering high-value solutions to its clients worldwide.

c) Titanium: Titanium is a company that provides the services of IT security. Titanium helps its customers to detect, prevent and respond to cyber-attacks.

d) AAEON Technology: AAEON Technology is a Taiwan-based company that provides a range of IT hardware and software solutions to customers worldwide.

e) Arrow Electronics: Arrow Electronics is a company that provides innovation and engineering support to companies worldwide. Arrow provides products and services to the electronics, computing and communication, and industrial and power markets.

f) Microsoft: Microsoft is an American technology company that develops, manufactures, licenses, and supports a family of products, including operating systems for computing devices, servers, and phones for home and business.

8. SWOT Analysis of Intel

Strengths of Intel

a) Strong industry position: The Company has a strong market share in its major business segments. The company’s main products are based on technology that is not easily copied, especially the PC microprocessors.

b) Economies of scale: The microprocessor market is huge and would be relatively easy to grow with any new entrant. Therefore, Intel has economies of scale in technology and production.

c) Strong research: The Company’s research and development units are world-renowned. All major products of the Company incorporate some breakthrough technology that other manufacturers cannot copy.

d) Strong partnership with Microsoft: The Company has strong partnerships with Microsoft, limiting the market for competitors to a small portion of the total market.

c) Trustworthy raw material suppliers — the firm has a solid base of reliable raw material suppliers, allowing it to overcome any supply chain bottlenecks.

d) Strong high-tech culture: The Product is innovative with cutting-edge technology and built on breakthroughs that are not easy to copy.

e) High level of customer satisfaction – the company, with its dedicated customer relationship management department, has achieved a high level of customer satisfaction among present customers and good brand equity among the potential customers.

f) Strong distribution network — Intel has developed a dependable distribution network over the years that can cover most of its potential market.

g) High Free Cash Flow – Intel has strong free cash flows, which allow the corporation to grow into new initiatives with resources on hand.

h) Brand recognition: Asclepios has strong brand recognition, owing to the positive perception of its products and the excellent customer service provided by the company.

i) Social media: The Company often invests in social media to reach out to its customers. Due to its investments in social media, Intel has successfully persuaded its customers to use its products.

Weaknesses of Intel

a) High cost of goods: The Company has high fixed costs, adversely affecting profit margins.

b) High level of debt: The Company has high debt levels, which increases the interest costs on funds borrowed to finance activities.

c) Declining PC sales: The company is currently facing challenges due to the shrinking PC market and an over-dependence on the PC segment.

d) Limited business diversification: The Company is currently facing challenges in diversifying its business by entering the mobile phone, tablet, and TV segments.

e) Overproduction: The Company has high levels of overproduction, which may hinder the company’s growth.

f) Service in Developing countries: The Company serves a limited number of clients in developing countries, detracting it from the growth strategy.

g) Weak Research & Development Division: the Company’s Research Division has very little investment compared to its revenue.

Opportunities of Intel:

a) Market growth: the Company’s products are expected to be in high demand as the PC market declines.

b) Demand for Intel products: The increased demand for advanced devices such as personal computers and servers will increase the demand for Intel’s products.

c) Rising PC sales: the growing use of personal computing devices is expected to boost the demand for Intel’s products.

d) Automatic Cars: This is another segment that requires processors and hence presents a great opportunity for a company like Intel

e) Drones: Since drones are rising, there is a great market for Intel’s processors.

f) New products: As the company is continuously launching new products, this also presents an opportunity for selling their product in more markets.

g) Developing countries: The Company has a vast market in developing countries, which the company is serving through its distributors. Hence this presents an opportunity for the company to improve its sales in these markets.

h) New technology: As the company invests in cutting-edge technologies, there is a great demand for its products among customers.

i) International expansion: Since the international demand for the company’s products is on the rise, this also presents an opportunity to increase their market share.

Threats of Intel

a) Competition: Since the company is a leading player in this industry, they have been facing pressure from its competitors. Other competitors include Qualcomm, Samsung, NVidia, and AMD.

b) New Product Launches The competitors of the Company launch new product lines, which may provide a threat to the sales of Intel’s products.

c) Price: Many firms aim to win Intel’s business by lowering the price of their goods. A market that is price sensitive will be drawn to considerably lower pricing.

d) Diversifying: Intel has failed to diversify its business strategically. So, the company is facing challenges with its latest venture into the mobile phone market.

e) Fluctuating PC Sales: the Company’s product is extremely PC dependent, which puts it at great risk in times of falling PC sales.

f) Harmful regulations: The Company is currently facing harmful regulations from countries like China trying to hinder the sale of their products.

i) Reliance on third-party manufacturers: As per analysts, the current business model of Intel rests on third-party manufacturers who are more dependent on Intel.

FAQS of Intel?

a) What is Intel, and what is it known for?

Intel Corporation (often shortened to Intel) is an American multinational technology company headquartered in Santa Clara, California, Gordon Moore, and Robert Noyce founded that.

It develops and manufactures computer hardware, computer software, and microprocessors.

Intel is largely known for making the central processing units (CPUs) that power nearly all the world’s personal computer and data-center systems.

Intel also develops and manufactures chipsets, graphics processing units (GPUs), and other related devices. Products

Intel is known for being a leading producer of computer chips.

b) Who are the competitors of Intel?

There are three main competitors of Intel: AMD, NVIDIA, and Qualcomm.

The competition heats up due to the expansion of Huawei into the mobile phone market, which has given them access to the markets that were previously under threat by Apple’s iPhones etc.

c) Why is the name Intel?

Robert Noyce and Gordon Moore, two semiconductor pioneers who had departed Fairchild Semiconductor, formed Intel on July 18, 1968.

Originally known as “NM Electronics” (for Noyce and Moore), the corporation bought the trademark “Intel,” which stands for “Integrated Electronics.”

d) Who is the CEO of Intel?

Patrick P. Gelsinger (15 Feb 2021–) is the current  CEO of the Company.

e) Which countries does Intel operate in?

Intel has operations in more than 60 countries and territories around the world.

f) Why is Intel so successful?

The company is extremely successful due to its products having high market demand.

g) Is Intel owned by Dell?

No, Intel is not owned by Dell. But the two corporations do have a close business relationship.

h) What country is Intel from?

Intel is a US-based multinational corporation.

I) how did Intel avoid the Great Recession?

Intel has invested in new products that have been growing at a faster rate than personal computers. They have also expanded into new technology markets such as servers, cars, and drones which have been doing better than PCs.

j) Who owned Intel?

Intel was founded by Robert Noyce and Gordon Moore, two individuals who had left Fairchild Semiconductor.

k) What products does Intel make?

Intel makes chips used in personal computers, servers, mobile devices, and other electronic products.

l) What is the age of Intel?

Intel is 53 years old

m) How many employees does Intel have?

Intel has over 110,600 employees as of 2020

n) How much revenue does Intel earn?

Intel earned US$77.87 billion in 2020

o) What is the biggest market of Intel?

The biggest market of Intel is the United States, which China follows.

p) What is the best product of Intel?

The best product of Intel is the core i7 (Y series), which is an amazing processor.

q) Where does the Intel stock trade?

The stock of Intel trades on NASDAQ.

r) When was Intel founded?

Intel was founded on July 18, 1968, by Robert Noyce and Gordon Moore, who had both previously worked for Fairchild Semiconductor.

s) How many locations does Intel have?

Intel is headquartered in Santa Clara, CA, and has 174 office locations across.