International Managem ent Assignm ent Pr oject Report on Intel In side

INTEL C ORPORATION
18 OCT 2013
Assignment: Fundame ntals Of International
Manage ment

Report By:
Group 3, Section B (EPGDIB 2013-15)
Group Members:
Ajit (4B), Atul (15B), Geetika (22B), Neeraj (34B), Pooja (37B),
Rahul (39B)

International Managem ent Assignm ent Pr oject Report on Intel In side

Executive Summary
Intel, a US-based semiconductor chip maker, operates in four segments PC Client Group, Data
Center Group, Other Intel Architecture segment, and Software and Services segment. During
2012, the companys revenues declined 1 % y-o-y to reach $53bn. Following is a brief on the keyaspects of the company:

Robust Organizational Control: In terms of its organization control, Intel (like most
of the fortune 500 companies) follows combined organization structure for managing
operations of the company. The company is keen to comply with Global environmental
standards and it takes corporate responsibility seriously to the extent that it has included
environmental goals to employees KRA (including CEO and CFO). With such robust
organizational controls in place it is likely that the company will achieve its
environmental goals by 2020.
Aggressively Competes against competitors: Intel has been successfully
counteracting to the threats from its major competitors namely, Taiwan Semiconductor
Manufacturing Company Ltd (TSMC), Advanced Micro Device (AMD), Samsung, Texas
Instruments (TXN), Toshiba and STMicroelectronics. Its past strategies have included
partnering with OEMs to proactively promote Intel Inside Campaign; concentrating on
mobile computing and internet related offerings; and forming a market ecosystem
through forming partnerships (e.g. with Apple).
Strategic Business Expansion: Intel has been on an expansion mode in terms of
product; geographies and acquisitions. In the products space, its future focus lies on
smartphone and tablets (technologies like Positioning, Long term Evolution, voice
recognition); 3D visualization and perceptual computing (i.e. gesture, touch, voice, and
other artificial intelligence-style sensory technologies); and upgradation of core processor
business (voice recognition technology & increased battery life). In terms of markets, it
plans to ramp up its business in Israel and Ireland.
Prudent Assessment of International Markets: Intel has been effectively analysing
its market environment & the various political, economic, socio cultural, technological &
legal forces of different countries for developing a thorough understanding of the market
in which it operates. This has enabled it to take advantage of the growth opportunities
and minimize the threats faced during its operations.

Overall, we feel that that Intels diversified Product Portfolio, robust R&D
capabilities and effective supply planning strategies give it a distinctive
advantage over its peers. Though the company has a risk associated with
competition and technological changes, the growing semiconductor industry and
the potential to maximise avenues owing to its past and future acquisitions
provide it a formidable opportunity. However, it must address the risks
emanating from declining profitability, high concentration in the PC segment and
product related issues to get back to a growth trajectory.

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International Managem ent Assignm ent Pr oject Report on Intel In side

Table of Contents
Ex ecutive Summary
Work Allocation .......................................................................................................... - 3 Chapter 1 : Background ................................................................................................ - 4 1.1
Structure and Content of the Report .................................................................. - 4 1.2
Products & Services:........................................................................................ - 4 1.3
Geographical Presence and Employees............................................................... - 5 Chapter 2: Financial Analysis ........................................................................................ - 6 2.1
Revenue by Geography .................................................................................... - 7 2.2
Revenue by Major Operating Segment ............................................................... - 7 Chapter 3: Organization Structure ................................................................................. - 8 3.1
Segmental Organization Structure ..................................................................... - 8 3.2
Combined Organization Structure ..................................................................... - 9 3.3
Geographical Organization Structure ................................................................- 10 Chapter 4: Organization Control ................................................................................... - 11 4.1
Product Energy Efficiency and Product Ecology.................................................. - 11 Chapter 5: Competition Analysis...................................................................................- 13 5.1
Competitors..................................................................................................- 13 5.2
What Intel did right with Microprocessors? .......................................................- 14 Chapter 6: SWOT Analysis........................................................................................... - 17 6.1
Strengths...................................................................................................... - 17 6.2
Weakness .....................................................................................................- 1 8 6.3
Opportunities................................................................................................- 19 6.4 Threats ....................................................................................................... - 20 6.5
Conclusion: ..................................................................................................- 21 Chapter 7 : Problems faced in different countries ............................................................ - 22 7 .1
PEST Analysis .............................................................................................. - 22 7 .2 Problems faced in Asia Pacific Countries .......................................................... - 24 7 .3 Problems faced in European Countries............................................................. - 24 7 .4 Problems faced in African Countries: ............................................................... - 25 7 .5
Conclusion .................................................................................................. - 25 Chapter 8: Future Outlook and Business Expansion Plans ............................................... - 25 8.1
By Acquisitions ............................................................................................ - 26 8.2 By Product Launches:.................................................................................... - 26 8.3 By Geographical Expansion ............................................................................ - 27 8.4 Other Investments/plans ............................................................................... - 27 8.5 Conclusion .................................................................................................. - 27 -

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International Managem ent Assignm ent Pr oject Report on Intel In side

Work Allocation
Chapter

Section

Prepared by

Chapter 0

Ex ecutive Summary

Pooja (37 B)

Chapter 1

Background

Rahul (39B)

Chapter 2

Financial Position

Rahul (39B) & Neeraj (34B)

Chapter 3 & 4

Organization Structure and Organization Control

Atul (15B)

Chapter 5

Competitors

Ajit(4B)

Chapter 6

SWOT Analysis

Pooja (37 B)

Chapter 7

Problems faced in different countries

Geetika (22B)

Chapter 8

Future Outlook and Business Expansion Plans

Neeraj (34B)

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International Managem ent Assignm ent Pr oject Report on Intel In side

Chapter 1: Background
Intel Corporation is an American multinational semiconductor chip maker corporation
headquartered in Santa Clara, California. Intel is the worlds largest and highest valued
semiconductor chip maker, based on revenue. Intel Corporation, founded on July 18, 1968, is a
portmanteau of Integrated Electronics (the fact that "Intel" is the term for intelligence
information was also quite suitable).
Back in 1968, two scientists, Robert Noyce and Gordon Moore, founded Intel with a vision for
semiconductor memory products. By 1971, they had introduced the worlds first microprocessor.
Since then, Intel has established a heritage of innovation that continues to expand the reach and
promise of computing while advancing the ways people work and live worldwide
In this report, we have attempted to capture various components of Intel Corporation by carrying
out an in-depth secondary research. The following section captures the structure and content of
the report.

1.1

Structure and Content of the Report

The report comprises the following sections:

Chapter one provides a brief background on the Intel Corporation, including its products &
services, geographical presence, employees and plants
Chapter two analyses the current financial position of the company and also analyses the
revenue generation by geography and product/service segments
Chapter three & four provides an overview on the organization structure and control of the
Intel Corporation across geographies
Chapter five analyses on how Intel responded towards their competitors and achieved success
at counteracting threats to sustainability
Chapter Six presents the SWOT analysis of the company briefly capturing all the essential
components like product portfolio, financial parameters, legal issues, technological changes,
currency fluctuations, strategic acquisitions and many more.
Chapter seven captures the kind of challenges faced by Intel in different countries and how
strategically they managed to tackle various political, economic, socio cultural, technological &
legal forces of different countries
Chapter eight finally talks about how Intel has been able to expand successfully and what are its
future investment/operating plans

1.2

Products & Services:

Intel Corporation designs, manufactures, and sells integrated digital

technology platforms worldwide. The company operates through PC Client
Group, Data Center Group, Other Intel Architecture, Software and Services, and All
Other segments.

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International Managem ent Assignm ent Pr oject Report on Intel In side

1.3

It offers microprocessors that process system data and controls other devices in the
system; and chipsets, which sends data between the microprocessor and input, display,
and storage devices, such as keyboard, mouse, monitor, hard drive or solid-state drive,
and optical disc drives; system-on-chip products that integrate its processing
functions with other system components, including graphics, audio, and video onto a
single chip; wired network connectivity products; and wireless connectivity
products.
The company also provides mobile phone components comprising baseband
processors, radio frequency transceivers, and power management integrated circuits; and
mobile phone platforms, such as Bluetooth wireless technology and global positioning
systems receivers, software solutions, customization, and interoperability tests.
In addition, it offers endpoint security, network and content security, risk and
compliance, and consumer and mobile security software products for
consumer, mobile, and corporate environments to protect systems from malicious virus
attacks, as well as loss of data. Further, the company provides NAND flash memory
products, which are used in solid-state drives.
Intel Corporation sells its products primarily to original equipment
manufacturers, original design manufacturers, and industrial and
communications equipment manufacturers
in the computing and
communications industries.
The company has a strategic collaboration with ZTE Corporation focusing on
the Intel Atom Processor Z2580 platform.

Geographical Presence and Employees

Intel is geographically present in 53 countries across Asia/Pacific, Europe, Latin America, Middle
East/Africa and North America. The following map captures Intels key locations worldwide

And as on Dec 2012, Intel had over 105,000 Employees worldwide with approximately

51% of these located in the US.

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Chapter 2: Financial Analysis

As shown in the following schematic, Intels revenue for 2012 was down 1% from 2011 and lower
than Intel expected at the start of the year. However, in a challenging environment, the companys
business continued to produce significant cash from operations, generating $18.9 billion in 2012.
In addition, the company purchased $11 billion in capital assets and invested over $10 billion in
Research and Development as they continued to make significant investments to extend their
manufacturing leadership. The following schematic captures Intels financial growth in 2012
compared to previous years

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International Managem ent Assignm ent Pr oject Report on Intel In side

2.1

Revenue by Geography

Geographically, the company operates through six regions, namely Singapore, Taiwan,
the US, China (including Hong Kong), Japan and Other Countries.

Singapore is the major revenue generator for Intel with nearly one -fourth of the
revenues in 2012.

65% of Intels revenue is generated from the APAC region.

2.2

R
evenue by Major Operating Segment

Intel has 5 major Operating Segment contributing to its revenue growth:

o PC Client Group (PCCG)
o Data Center Group (DCG)
o Other Intel architecture (Other IA)- includes IMC, ISG, the Netbook Group, the
Tablet Group, the Phone Group, and the Service Provider Group operating
segments.
o software and services (SSG)
o All others- Non-Volatile Memory Solutions Group

The PC Client Group (PCCG) operating segment has been the major
contributor (over 60%) for Intel over the years. The revenue contribution was
$34,138 for 2012 as compared to $35,639 in 2011.

DCG has been the second largest contributor with about 20% contribution towards the
revenues.

The SSG segment overall has been the lowest contributor with about 5%, however its
contribution towards the revenue has grown from the previous two years

Intel made tremendous progress across the business in 2012 as they

entered the market for smartphones and tablets, worked with their
partners to reinvent the PC, and drove continued innovation and growth in
the data center. Their strong product pipeline has well-positioned Intel to
bring a new wave of Intel innovations across the spectrum of computing.

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International Managem ent Assignm ent Pr oject Report on Intel In side

Chapter 3: Organization Structure

3.1

Segmental Organization Structure

Over time, the number of devices connected to the Internet and each other has grown from
hundreds of millions to billions. The combination of the proliferation of mobile devices
connecting to the Internet and a build-out of the cloud infrastructure that supports these devices
is driving fundamental changes in the computing industry.
Intels Primary Focus has been transforming from the design and manufacture of semiconductor
chips for PCs and servers to the delivery of solutions consisting of hardware and software
platforms and supporting services across a wide range of computing devices, and innovating
around energy-efficient performance, connectivity, and security. Intel designs and manufactures
advanced integrated digital technology platforms. A platform consists of a microprocessor and
chipset, and may be enhanced by additional hardware, software, and services. They sell these
platforms primarily to original equipment manufacturers (OEMs), original design manufacturers
(ODMs), and industrial and communications equipment manufacturers in the computing and
communications industries. There platforms are used in a wide range of applications, such as PCs
(including Ultrabook, detachable, and convertible systems), servers, tablets, smartphones,
automobiles, automated factory systems, and medical devices. They also develop and sell software
and services primarily focused on security and technology integration. They serve customers
around the world, and at fiscal year-end 2012, had 105,000 employees in more than 60 countries.
Below chart shows organization structure basis on above segments.
Each of the operating segments within the aggregated operating segments does not me et the

Intel Group
FY12 Revenue $53.3BN

PC Centre Group
Rev contri. 64%,

Data Centre Group

Architecture

Software & Service

Operating Segment

Operating Segment

Rev contri. 20%

Rev contri. 8%

Intelligent System

Intel Mobile

Group

Communication

Network Group

Tablet Group

Phone Group

Rev contri. 5%

Mcfee

All Other
Rev contri. 3%

Wind River
Software Group

Software and
Service Group

Service Provider

Group

quantitative thresholds to qualify as reportable operating segments; however, Intel has elected to
disclose the aggregation of these non-reportable operating segments. Revenue for reportable and
aggregated non-reportable operating segments is primarily related to the following product lines:

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International Managem ent Assignm ent Pr oject Report on Intel In side

3.2

PC Client Group. Includes platforms designed for the notebook (including Ultrabook,
detachable, and convertible systems) and desktop (including high-end enthusiast PCs)
market segments; and wireless connectivity products.
Data Center Group. Includes platforms designed for the server, workstation, and storage
computing market segments; and wired network connectivity products.
Other Intel architecture operating segment Includes platforms designed for embedded
applications; mobile phone components such as baseband processors, radio frequency
transceivers, and power management chips; platforms designed for the netbook market
segment; platforms designed for the tablet market segment; platforms designed for the
smartphone market segment; and gateway and set-top box components.
Software and services operating segments Includes software products for endpoint
security, network and content security, risk and compliance, and consumer and mobile
security from our McAfee business; software optimized products for the embedded and
mobile market segments; and software products and services that promote Intel
architecture as the platform of choice for software development.
All other category includes revenue, expenses, and charges such as:
Results of operations from our Non-Volatile Memory Solutions Group that includes
NAND flash memory products for use in a variety of devices;
A portion of profit-dependent compensation and other expenses not allocated to the
operating segments;
Divested businesses for which discrete operating results are not reviewed by our
CODM;
results of operations of seed businesses that support our initiatives; and
Acquisition-related costs, including amortization and any impairment of acquisitionrelated intangibles and goodwill.

Combined Organization Structure

Intel uses a distributed model for managing corporate responsibility across the company, as they
believe that embedding responsibility within specific business groups is the most effective
management approach. Many Intel
business groups have established teams
dedicated to corporate responsibility
CFO & Board of
issues, and they also have established
Directors
cross-functional Management Review
Committees (MRCs) consisting of senior
executives who manage corporate
Management Review
Committees
responsibility and sustainability activities
across the organization. Intels global
Corporate Responsibility Office acts as
Business Group and
an internal advisor to the business
Cross Functional Heads
groups and MRCs to drive strategic
alignment and incorporate external
stakeholder feedback into decision
processes.
Paul S. Otellini is the President and Chief Executive Officer of the company and Stacy J. Smith is
the Chief Financial Officer of the company

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3.3

Geographical Organization Structure

Intel is headquartered in Santa Clara, California and incorporated in the state of Delaware. It has
over 300 facilities located in more than 60 countries. It uses third -party manufacturing
companies (foundries) to manufacture wafers for certain components, including networking and
communications products. In addition, it primarily uses subcontractors to manufacture boardlevel products and systems, and smartphones. Although it manufactures the majority of products
in its own factory network, still have thousands of suppliers, including subcontractors, providing
our various materials and service needs. Below Chart shows the work force distribution basis
geographical location for 2012.

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International Managem ent Assignm ent Pr oject Report on Intel In side

Chapter 4: Organization Control

It is important for every company to assign goals of organization control and gauge its
performance against the set goals. Control here means the regulation of activities within an
organization to guarantee that some targeted performance remains within an acceptable limit to
facilitate goal attainment. Intel believes that technology will continue to play a fundamental role
in addressing the worlds toughest environmental and social challenges and therefore Intel has an
ambitious vision to create and extend computing technology to connect and enrich the life of
every person on Earth. While many companies in the electronics industry outsource most of their
production, Intel continue to design and manufacture the majority of our products in our own
factories. As a result, Intel places a strong emphasis on driving Organization controls for
environmental sustainability within manufacturing operations.
As an internal check to drive the Organization control, Intel has linked employee compensation to
environmental sustainability and achievement of these goals. The 2012 compensation metrics
focused on reducing electricity use in operations and energy-efficiency goals for new products.
To effectively drive Intels initiative to improve upon Product Energy Efficiency & Product
Ecology and Waste Reduction Reuse and Recycle, Intel followed the simple steps, as depicted in
the chart below, to ensure the organizational controls are robust and meets its end objective.

Setting
Standards

4.1

Measurnig
Performance
aginast Plans

Determining
Variance

Taking
Corrective
Measures

Product Energy Efficiency and Product Ecology

The Transistors are the building blocks of the electronics industry, so the challenge against Intel
was of creation of more energy-efficient transistors which in turn will lead to more energy efficient computers. With the help of research and development on new generation of process
technology, Intel was able to fit more transistors onto Intel processors, while also reducing the
energy required to power them. Moores Law describes the pace of these trends, which when
combined with Intel architecture and circuit design innovationshave enabled to reduce the
amount of energy consumed per transistor by a factor of approximately 1 million over the past 30
years.
Intel has estimated that this technology will enable the billion PCs and servers installed between
2007 and 2014 to consume half the energy and deliver 17 times the compute capacity of the first
billion PCs and servers (installed between 1980 and 2007 ). Also if you look at the energy
consumption of Year 2008 and 2012, it has remained same at 5.5Bn kWh level whereas the
revenue has almost doubled, this shows the level of commitment Intel has towards achieving its
goals.

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Waste: Reduce, Reuse, Recycle

Managing e-waste, such as computers, televisions, and mobile phones, is a global concern. While
Intels components are not typically subject to recycling or e-waste laws, still Intel work with
original equipment manufacturers (OEMs), retailers, customers, and others to identify shared
solutions for used electronics. Through the Intel equipment surplus program, Intel reuse, donate,
sell, or responsibly recycle electronic equipment from own operations. Intel also hosted e -waste
collection events in our communities for close to a decade, helping individuals and organizations
to recycle their used electronics
responsibly.
In 2012, solid waste generated
increased 95% over 2011 levels,
due primarily to ongoing
construction
of
new
manufacturing facilities. Close
to half of the solid waste
generated was related to
construction activities. In 2012,
Intels global solid waste recycle
rate was 88%, up from 85% in
2011. Intels 2020 solid waste
goal is to recycle 90% of our
solid waste worldwide.
To emphasize to employees the importance of this goal, Intel also included solid waste recycling
metrics in 2013 employee bonus. Intel has implemented several programs to reduce, reuse, and
recycle the solid waste resulting from construction activities and other Intel operations, including
donating materials to schools and nonprofits and composting cafeteria waste. In 2013, Intel has
rolled out a new initiative across
sites aimed at significantly
increasing the composting of
pre-consumer
and
postconsumer waste in Intels onsite cafeterias and converting to
all reusable dishware and
utensils. Below is the pie which
shows type of waste recycled in
FY2012.
Intel has grabbed various accolades for its initiatives such as Interbrand. Best Global Green
Brands 2012, 1st in 2012 GEMS Environmental Ranking and Top 500 Green Companies in
America (7 th overall).

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International Managem ent Assignm ent Pr oject Report on Intel In side

Chapter 5: Competition Analysis

5.1

Competitors

Intel was among the top ten sellers of semiconductors in the 1980s. In 1991, Intel became the
biggest chip maker by revenue and has held the position ever since. Other top semiconductor
companies include Taiwan Semiconductor Manufacturing Company Ltd (TSMC), Advanced
Micro Device (AMD), Samsung, Texas Instruments (TXN), Toshiba and STMicroelectronics.
Competitors in PC chip sets include AMD, VIA Technologies, SiS, and Nvidia. Intel's
competitors in networking include Freescale, Infineon, Broadcom, Marvell Technology Group and
AMCC, and competitors in flash memory include Spansion, Samsung, Qimonda, Toshiba,
STMicroelectronics, and Hynix.
The only major competitor in the x86 processor market is Advanced Micro Devices
(AMD), with which Intel has had full cross-licensing agreements since 197 6. Each partner can
use the other's patented technological innovations without charge after a certain time. However,
the cross-licensing agreement is canceled in the event of an AMD bankruptcy or takeover. Some
smaller competitors such as VIA and Transmeta, produce low-power x86 processors for small
factor computers and portable equipment. However, the advent of such mobile computing
devices, in particular, smartphones, has in recent years led to a decline in PC sales. This is seen as
the main reason for Intel's 2013 Q1 net income drop of 25%. As over 95% of the world's
smartphones are currently powered by processors designed by ARM Holdings, this company has
become a major competitor for Intel's processor market. ARM is also planning to make inroads
into the PC and server market.
Table 1: Direct Competitor Analysis (as of 2012)
INTC

AMD

TXN

Market Cap

114.49B

2.7 8B

44.22B

Employees

105,000

10,340

34,151

Qtrly Rev Growth

-0.05

-0.18

-0.09

Revenue (ttm)

52.32B

4.67 B

12.30B

Gross Margin (ttm)

0.59

0.32

0.50

EBITDA (ttm)

20.19B

-282.00M

3.87 B

0.23

-0.11

0.21

Net Income (ttm)

9.48B

-850.00M

2.03B

EPS (ttm)

1.85

-1.14

1.81

P/E (ttm)

12.41

N/A

22.14

PEG (5 yr expected)

1.09

-2.42

2.31

P/S (ttm)

2.23

0.60

3.61

Operating
(ttm)

Margin

From the above table, we can see that Intel has the highest market capitalization. Its earnings are
also more than its competitors.
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According to 2012 NASDAQ report, Intel Corporation tops the chip maker segment
by sales. The ranking is as follows:
1. Intel Corporation
2. Samsung Electronics Co., Ltd.
3. Texas Instruments Inc.
4. Toshiba Corporation
5. STMicroelectronics NV
6. Infineon Technologies AG
7 . NEC Corporation
8. Free scale Semiconductor, Inc.
9. NXP Semiconductors NV
10. Applied Materials, Inc.
The following section captures how Intel created and sustained competitive advantage in one of
its key products i.e Microprocessors

5.2

What Intel did right with Microprocessors? - Creating and

Sustaining Competitive Advantage in Microprocessors

Value Creation
Creating
Value by
becoming a
Standard

Value Capture
Capturing
value by
becoming a
proprietary
Standard

Sustaining
Value
Sustaining
value by
countering
threats

a) Value Creation
Microprocessor is an industry where the standards are fragmented. Intel carved out its way, took
advantage of an opportunity and formed an industry standard.
IBM was looking for a microprocessor for its PC, which will become a de-facto standard. Intel
won the contract. Intel became an industry standard architecture. Industry Standard Architecture
(ISA) is a computer bus standard for IBM PC compatible computers introduced with the IBM
Personal Computer to support its Intel 8088 microprocessor's 8-bit external data bus.
This was a first and one of a kind contract which was formed. Intel thereby became a standard
and created value.

b) Value Capture - Proprietary Standard

One can earn rents from a standard by making it proprietary. How did Intel enforce Proprietary
standard?
It sued companies that attempt to copy its microcode.
Cut no of licenses given to manufactures from 12 to 4 thereby increasing profits 30% to
75%.

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International Managem ent Assignm ent Pr oject Report on Intel In side

Built sufficient production capacity so that there is no need to license to other

manufacturer
Became the sole manufacturer for 386 for IBM and subsequently Compaq.

c) Sustaining Value
There are various threats to sustaining competitive advantage. These include:
Imitation

Substitution
Threats

Saturation

Buyer Power

Supplier Power

Complementators
Power

Lets see how Intel dealt with these threats:

Imitation
Threats
Intels Response
Intellectual property Protection
AMD and Cyrix imitated Intels Intel Inside Campaign: Created Brand Awareness.
microprocessor
Program also included software vendors with the line
Runs even better on a Intel Microprocessor
Substitution
Threats
Alternative architecture, especially
RISC
Sun Microsystems Motto The
network is the Computer

Saturation
Threats
Growth in PC tapered off

Intels Response
Hedged against adoption of RISC by releasing i-860.
Introduced Pentium (improved version of x86)

Partnered with OEMs to promote Processors as well as

PCs through Intel Inside Campaign.
Hedged by getting into servers with 32-bit Xeon
Processor in 1998.

Intels Response
Intel concentrated on Mobile computing and Internet.

Buyer Power

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Threats
Recalling Pentium Processors

Intels Response
Replaced all the microprocessors

Supplier Power
THREATS
Intels Response
Made
Long
term
contacts Intel never asked for custom solutions rather it focused
necessary for Custom solutions.
on standard solutions.
Complement Power
Threats
Microsofts bargaining Power

Intels Response
Create market ecosystem by investing in
complementors.
Partnerships with Apple

Intel was well positioned with respect to process technology design capabilities to
successfully explore microprocessor market. The above Intels response clearly
highlights its success at counteracting threats to sustainability

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International Managem ent Assignm ent Pr oject Report on Intel In side

Chapter 6: SWOT Analysis

Strengths

Diversified Product Portfolio

Robust R&D Capabilities
Strong liquidity position
Effective supply planning

Opportunities

Positive outlook for semiconductor

industry
Strategic Acquisitions

Weaknesses

Threats

6.1

Declining Profitability
Over-reliance on PC segment
Dependence on few customers
Product-related Issues
Legal Proceedings

High Competitive Environment

Risk from gray market Currency
Fluctuations
Network Breach
Rapid Technological Changes

Strengths
a. Diversified Product Portfolio

The companys diversified product portfolio enables it to target different customer segments,
providing it a competitive edge over its peers. Intel offers processors, motherboards, chipsets,
desktops, laptops, servers, workstations, business PCs, embedded technologies, and niche
software development products. It has robust manufacturing capabilities, which helps in the
realization of operational efficiencies.

b. Robust R&D Capabilities

Intels strong research and development (R&D) capabilities enables it to implement innovative
technology and deliver advanced products and services that meet its customers' critical needs.
Intel is committed to invest in world-class technology development, particularly in the design and
manufacture of integrated circuits. In 2012, it incurred R&D costs worth $10.1bn as compared to
$8.4bn and $6.6bn in 2011 and 2010, respectively.
Intels R&D activities are directed towards the development of the technological innovations that
would deliver its next generation of products. Its R&D activities include designing and developing
new products and manufacturing processes to researching future technologies and products. Its
R&D efforts are intended to enable new levels of performance and address areas such as energy
efficiency, security, and scalability for multi-core architectures, system manageability and ease of
use.

c. Strong liquidity position

Intel is in a good position to meet its short term obligations as highlighted by a strong current
ratio (current assets to current liabilities). For the fiscal year ended December 2012, the company
reported current ratio of 2.43 times as against the sectors average of 2.38 times. The quick ratio
(a more stringent indicator to measure the liquidity position) was 2.06 times as against the 1.98
times sectoral average. Both current and quick ratios reported an increase in 2012 vis--vis 2011,
thus implying an increase in the overall liquidity position of the company.
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Furthermore, the company also reported an increase in its cash and cash equivalents in 2012. The
company had $8,47 8m in cash and cash equivalents as of December 2012, as compared to cash
and cash equivalents of $5,065m in 2011. This increase indicates the companys ability to obtain
additional debt to finance acquisitions, capture business opportunities and meet capital
expenditure or other capital requirements in the future.

d. Effective supply planning

Intel works with thousands of suppliers, including subcontractors which cater to its materials and
service needs. In certain cases, it relies on single or limited number of suppliers, or upon
suppliers in a single country. To address any possible supply -related issues in such cases, the
company has developed and implemented effective strategic plans to reduce the exposure as a
result from any supply disruption. These include, entering into long-term contracts with suppliers
for supply continuity; setting expectations for supplier performance and reinforcing these
expectations with periodic assessments and regular communication; and working with them to
implement improvements when necessary. Such effective supply planning strategies represent an
inherent strength of the company.

6.2

Weakness

a. Declining Profitability
The overall trend in Intels revenue and profitability remains dismal. The company ex hibited a
weak financial performance in 2012, reflecting its underperformance and inability to deliver the
value to its shareholders.
In USD million
2012
2011
Revenues

53,341

53,999

Operating Profit (EBIT)

14,638

17 ,345

EBIT Margin

27 %

32%

Net Profit Margin

21 %

24%
Source: Int el Annual Report, 2012

Operating Profit declined 16% y-o-y in 2012 to reach $14bn from $17bn in 2011.
EBIT margin decreased from 32% to 27 % from 2011 to 2012, respectively.
Net profit margin also declined from 24% to 21 %.

Such drastic decline in profitability ratios could affect the companys expansion plans and limit its
future growth potential.

b. Over-reliance on PC segment
Declining revenues and margins are majorly due to the fact that about 65% of Intels revenue is
accounted by the PC Client Group business segment. The companys main weakness is its
inherent over-reliance on the PC industry, which has been on a downfall owing to the advent of
new technologies in the form of smartphones and tablets. However, Intel has been pursuing its
business as usual i.e. continuing to focus its efforts on the development of more powerful chips
that are only suitable for PCs and high-end servers. Intel needs to recognize that there is a very

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International Managem ent Assignm ent Pr oject Report on Intel In side

obvious structural shift in the market for microprocessors (i.e. customers are not looking for such
high-end PCs but for good mobile technologies) and adjust accordingly.1

c. Dependence on few customers

The company is dependent on only a few customers for generating a major portion of its revenue.
In 2012, 43% of its revenues were accounted by its three largest customers (HP 18%; Dell 14%
and Lenovo 11%). The loss of any of these customers or a reduction in their spending could have
a significant adverse impact on Intels revenues. It could also increase the risks associated with
long-term operational efficiency in case of breach of any contracts with the company.

d. Product-related Issues
Intel has faced various product related issues in the past which has resulted in product recalls or
additional costs to replace defected ones. For instance:
Chipset Design Issue : In January 2011, as part of its on-going quality assurance
procedures, it identified a design issue with the Intel 6 Series Express Chipset family. The
company subsequently implemented a silicon fix and began shipping the updated version
of the affected chipset in February 2011. The total cost to repair and replace affected
materials and systems was $7 33 million.
Haswell sleep problems: In April 2013, it issued a Product Change Notification to
correct sleep problems with its Haswell processors.2
Such events have not only affected its brand image and market positioning, but have also
significantly affected the companys bottom line.

e. Legal Proceedings
Given the nature of industry it operates in, the company is subject to various lawsuits either as a
defendant or a plaintiff. Its involvement in legal proceedings and claims on employment-related
disputes, patent claims, and disputes over contract agreements and other commercial disputes
could have a material adverse effect on its liquidity and financial condition. For instance:
AMD filed a suit with the European Commission (EC) alleging Intel of using unfair
business practices to persuade customers to buy its microprocessors (2001). Such
allegations are under scrutiny in different jurisdictions Korea, US (82 separate classaction suits). The case hearings are still on-going.
In May 2013, Lehman Brothers Inc sued Intel accusing it of seizing $1 billion in collateral
in breach of a swap agreement.

6.3

Opportunities

a. Positive outlook for semiconductor industry

The worldwide semiconductor sales in 2012 reached $291.6 billion (according to The
Semiconductor Industry Association), recording robust demand in several segments in 2012.
According to The World Semiconductor Trade Statistics, the market is estimated to grow 4.5% to
$303 billion in 2013, with healthy mid-single digit growth across most of the geographical regions

1
2

Source: Intel is hard at work building products people dont want, and its earnings will reflect that, Quartz, 16 Apr 2013
Source: Intel Confirms, Fixes Haswell's USB 3.0 S3 Sleep Problems, Toms Hardware, 8 April 2013

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and semiconductor product categories. This represents a good opportunity for the companys
future prospects.

b. Strategic Acquisitions
Intel has been extremely active in the acquisitions space. These acquisitions help the company in
strengthening its presence in the market it already serves and also helps in entering into new
markets and diversify its services portfolio. Following are some of the recent acquisitions made by
Intel.

6.4

Acquired Aepona and Mashery (for expanding its capabilities in software and services);
Acquired certain assets of Cray Inc (for its high-performance computing interconnect
program).
Signed a strategic agreement with Visa Inc to develop mobile commerce solutions
tailored to consumers in developed and developing countries.
Signed an agreement with RealNetworks to purchase approximately 190 patents and 17 0
patent applications and next-generation video codec software.
Entered into a multi-year, multi-device strategic relationship with Motorola Mobility Inc,
where Motorola provides smartphones using Intel Atom processors.

Threats

a. High Competitive Environment

Intel faces intense competition in various market segments it operates. In the core PC and server
business areas, emerging players are forming alliances with traditional competitors. In the
adjacent market segments (such as smartphones and tablets), it faces stiff competition from the
already established players. Intels major competitors across different segments include:
Server processor market: Advanced Micro Devices Inc (AMD)
Chipset market: ATI Technologies, Broadcom, NVIDIA and Silicon Integrated Systems
Corporation.
Desktop market: SMD, IBM and VIA.
Security products market: Symantec Corporation
Many of its competitors have a long operating history, greater brand recognition, established
customer and supplier relationships and greater financial resources. This poses a big threat for
Intel in terms of competitive pricing pressure making difficult for Intel to compete against them.
Moreover, the emergence of new business models from the OEMs (such as Apple and Samsung)
which have vertically integrated their own proprietary semiconductor and software assets also
pose a huge challenge for Intel. In doing so, these OEMs are able to offer greater differentiation in
their products and increase their share of the profits for each finished product they sell.
Unforeseen competitor acquisitions, collaborations or licensing scenarios (including injunctions
or other litigation outcomes) could also have a significant impact on its competitive position.
In order to successfully compete against competitors, Intel needs to cultivate new industry
relationships and improve existing products and processes ahead of competitors.

b. Risk from gray market

The company markets and sells its products through various channels namely, original equipment
manufacturers (OEMs) and original design manufacturers (ODMs), PC and network
communications products users, and other manufacturers. However, several of the companys
products are diverted from authorized distribution channels and sold in the gray market. The
products that enter the gray market are discounted heavily and sold to customers. Cheap

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International Managem ent Assignm ent Pr oject Report on Intel In side

availability of products in such markets adversely affects the demand for the companys products.
Moreover, the products sold in gray markets are damaged, mishandled or altered. Inability to
control sales of its products in the gray market could have an adverse effect on the company. The
sale of such products under companys brand name may have a negative impact on its brand
image.

c. Currency Fluctuations
A substantial part of Intels revenues is transacted in US Dollars. However, a significant amount
of its operating expenditures and capital purchases is incurred in other currencies, primarily the
euro, the Japanese yen and the Israeli shekel.
Intels hedging programs reduce, but do not completely eliminate the impact of currency
exchange rate movements. Therefore, any adverse changes in exchange rates could affect its
overall financial results considerably.

d. Network Breach
The company faces regular attempts by malicious attackers to gain unauthorized access through
the Internet or to introduce malicious software to its IT systems. It is also targeted of malicious
attacks which attempt to gain access to its network, data centres; or even of its customers/ end
users, with the intention to steal proprietary information related to its business.
In some cases, preventive and remedial action is not successful and could result in incurring costs
on rebuilding internal systems, reducing inventory value, modifying products and services,
defending against litigation etc. Publicity about vulnerabilities and attempted or successful
incursions could also damage the companys reputation and thereby reduce demand for its
products and services.

e. Rapid T echnological Changes

The company 's offerings are subject to rapid technology changes. The success of the company
mainly depends upon its ability to develop and implement latest technology solutions. To
compete effectively with its peers, the company should continually introduce new products that
meet and exceed the customers requirements. The introduction of products using new
technologies or the adoption of new industry standards can make existing products, or products
under development, obsolete or unmarketable. Inability to study the evolving technological
landscape may impact the companys competitive position.

6.5

Conclusion:

Diversified Product Portfolio, robust R&D capabilities and its effective supply planning strategies
give Intel a distinctive advantage over its peers. Though the company has a risk associated with
competition and technological changes, the growing semiconductor industry and the potential to
maximise avenues owing to its past and future acquisitions provide it a formidable opportunity.
However, it must address the risks emanating from declining profitability, high concentration in
the PC segment and product related issues to get back to a growth trajectory..

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Chapter 7: Problems faced in different countries

As a global corporation with locations & suppliers all over the world, Intel has to respond to a
wide range of difficulties & disasters in the external environment in order to keep the business
running smoothly & profitably. They have to & have been facing problems in their critical
business functions such as handling customer orders, overseeing production & deliveries, and
managing supply chains, due to diverse POLITICAL, ECONOMIC, SOCIO-CULTURAL,
TECHNOLOGICAL, ENVIRONMENTAL & LEGAL (PESTEL) forces in different
countries.

7.1

PEST Analysis

Lets go through the PEST analysis that shows how the external environment & forces of
different countries have affected Intels growth & development and what all challenges they have
faced.
POLITICAL CHALLENGES
Intel being a multinational company has to operate according to different government
policies of different countries depending on the stability of the countries.
Politics has a serious impact on the economic environment of the country. Political
ideology and political stability or instability strongly influence the pace and direction of
the economic growth. Politics can consist government stability, political values and
beliefs shaping policies. Therefore, the politics of a country affect the investment decision
of organizations in the country strongly. Seeing V ietnam has socio-political stability, Intel
were in serious discussion for chip manufacturing in India but the government was a bit
slow on semiconductor manufacturing proposals so therefore it choose Vietnam. But it
took Intel 4 years of negotiation until the Vietnamese government gave them the license.
In the semi conductor industry, competition regulation is low and corporate & individual
taxes are major considerations. Further due to increasing internationalization of semi
conductor firms, they are being subject to international trade regulations & consumer
protection has also become a major consideration. This has led to Intel focusing on
having their R&D on environmental management to protect their consumers.

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International Managem ent Assignm ent Pr oject Report on Intel In side

ECONOMIC CHALLENGES
Economic factors throw light on the nature and direction of the economy in which firm
operates. Intel had to focus on economic trends in segments that affect the industry. The
economic factors can also be divided into some categories like GNP trends, money supply,
inflation rate, unemployment. Seeing that Vietnam is one of the fastest growing
economies in the South East Asia, which has grown by 7 to 8 percent a year, & that it is
also the South East Asias fastest growing PC market and low cost (low labours cost, low
living cost) (little or no cost pressure), are some of the main reasons why Intel choose to
invest in Vietnam.
Also, the biggest challenge for Intel has always been to develop their products at a rate
that would keep up with the demands of different markets.

SOCIO CULTURAL CHALLENGES

Social values like demographic factors such as population, age distribution, literacy levels,
inter-state migration, rural-urban mobility or cultural factors like social attitudes,
customs, beliefs, rituals influence business practices in a major way. One of the main
reasons for a companys investment decision is the workforce of that country. Some of the
countries that Intel has made investments in, like India, China and Vietnam, are for the
reason that these countries have young and plentiful supply of workforce. For ex,
Vietnams labor force has a 96% literacy rate and high scientific and technological
knowledge. Vietnam also has socio -political stability. Even income distribution among
target market is observed in this industry & their main consumers are the large
companies. Since the nature of the industry in which Intel is involved in is a very dynamic
nature where change & innovation are everyday words, there exists the need & challenge
to constantly be sensitive to the changes in market demands & their preferences, in order
to maintain market leadership.

TECHNOLOGY
Technological factors represent major opportunities and threats which must be taken into
account while formulating strategies. Technological breakthroughs dramatically
influences the organizations products, services markets, suppliers, distributors,
competitors, customers, manufacturing processes, marketing practices and competitive
position. Technological changes can reduce or eliminate cost barriers between businesses,
create shorter production runs, create shortages in technical skills and result in changing
values and expectations of customers and employees. This is especially important for an
IT company such as Intel as it can be the key for it to survive or the reason which has
made the failure of some IT companies. There are more and more consumers in the
wireless industry, nobody can argue that the PDA and cell phones have become so
popular; they are the new digital trends of this era. Intel cannot ignore this profitable
industry. So it has researched and announced the new chip for mobile devices which is
believed to unleash new innovation across the industry.
The biggest challenge for Intel in this context is to cope up with the very fast technological
transfer & the faster rate of technological obsolescence.

ENVIRONMENTAL CHALLENGES

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Environment conservation and protection is an issue, which has gained prominence

because of deteriorating environmental balance which is threatening the sustainability of
life and nature across the world. Nowadays, environment problems have become big
matters. Every tech companies have to take the key roles to solve them including Intel.
Intel has proclaimed the Climate Savers Computing Initiative. The Initiatives goal is to
reduce global computer CO2 emissions by 54 million tons per year, equivalent to the
annual output of 11 million cars or 10-20 coal-fired power plants. This clearly shows that
Intel is trying its best to reduce the pollution of the environment.

7.2

LEGAL CHALLENGES
Nevertheless, with globalization, the rules of competition, trade mark rights and patents,
WTO rules and implications, price controls and product quality laws and a number of
other legal issues in individual countries have become important challenges. In 2007 -08,
the European Union had formally lodged antitrust charges against Intel, accusing the
CPU maker of using illegal methods to compete against its main rival AMD. This action
represented the culmination of years of antitrust investigation by the EU and was likely
the beginning of a very unpleasant experience for Intel. EU charged that Intel used illegal
methods to coerce OEM computer manufacturers to ship systems with Intel rather than
AMD processors. Intel is a large firm and being accused of anti-competitive behaviour by
the EU affected its reputation in a big way, and to prove its conduct had been legal it also
had to incur hefty costs.

Problems faced in Asia Pacific Countries

Intel operates from major locations within the Asia Pacific region, including, Australia,
Hongkong, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea,
Srilanka, Taiwan, Thailand & V ietnam. The key operations in this region cover assembly & test; R
& D; sales & marketing; software development; & systems manufacturing.
300 million people in the Asia Pacific are currently digitally unaware & illiterate. Hence
bridging the digital divide and taking IT to rural & isolated areas of countries like
Vietnam, India, Pakistan, has been the biggest problem for Intel.
The socio political situation of countries like Pakistan, Philippines, Srilanka, serves as a
hindrance for attracting foreign investments & Intel has to deal with it.
Terrorism remains a major concern for Intel to make itself prepared with the counter
measures in countries like Vietnam, Philippines, Srilanka, Pakistan, and India.
Facing Cultural diversities has been one of the major challenges for Intel.
Intel has fought with the problem of INTERNET GENDER GAP and has taken rigorous
actions & initiatives to bridge this gender gap and empower women through innovation &
education.
Intel is still fighting with the problem of reducing absolute environmental footprint due to
its growth & increasing complexity of their manufacturing processes.

7.3

Problems faced in European Countries

Taken as a single geographic entity, Europe has the largest economy in the world. Europe is one of
the pillars of the global system & what happens to Europe definitely defines how the World works.
It defines for Intel too.
Europe is a significant location for both Intels R&D and Manufacturing. But the
problems of EU like stabilizing itself, stopping its fragmentation & preparing for more
integration and expansion, are also the major problems of Intel.

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International Managem ent Assignm ent Pr oject Report on Intel In side

7.4

7.5

European antitrust regulators imposed their largest fine ever in a market dominance
case against Intel. The commission accused Intel of abusing its dominant position in
computer chips by giving large rebates to computer makers, by paying computer makers
to delay or cancel product lines and by offering chips for powerful server computers at
prices below actual cost. Intel has been engaged in a lengthy, multi faceted battle with
antitrust authorities across the globe, like in Japan, South Korea, and the United States.
In European countries Intel corp., along with IBM, has been posting the slowest & lowest
sales growth in years due to the slowdown triggered by the European debt crisis &
banking crisis, especially in Greece, Spain & Italy. The personal computer industry here is
still recovering from a disk drive shortage.
On August 19, 2010, Intel announced that it planned to purchase McAfee, a manufacturer
of computer security technology. The purchase price was $7 .68 billion, and the
companies said that if the deal were approved, new products would be released early in
2011.On January 26, 2011, the European Union approved the acquisition, after Intel
agreed to provide rival security firms with all necessary information that would allow
their products to use Intel's chips and personal computers. Intel had to face lot of legal
proceedings in context of patents & intellectual property rights.

Problems faced in African Countries:

One of the challenges Intel faced in Africa was lack of information & communication
technology in the African countries.
It has been very tough for Intel to understand the domestic market dynamics of African
countries. There are lot of differences from country to country.
Intel has faced problems in hiring local talent to help them understand African markets &
to overcome differences in language, culture & regulations.
When Intel came & started doing business in Kenya, they had to look for synergies. They
had to collaborate by bringing in more devices into the safaricom shop and with that Intel
benefitted by being the largest device retailer.
Other major problems faced by Intel in the African countries have been Security
challenges, Negative economic & political corollaries, corruption, Bad FDIs, lack of
infrastructure, etc.

Conclusion

Intel, appropriately & strategically, analyses the environment & its various political, economic,
socio cultural, technological & legal forces of different countries for understanding the Big
picture in which it operates, enabling the company to take advantage of the opportunities and
minimize the threats faced by their business activities

Chapter 8: Future Outlook and Business Expansion

Plans
Intel has been continuously expanded their operations through various modes such as strategic
acquisitions, alliances, collaborations, product launches and many more. The following section

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captures on how Intel has been able to sustain its brand name and although the market is more
competitive today, Intel is still the largest chip manufacturer in the world.

8.1

By Acquisitions

Adding two software companies -Aepona and Mashery - in the portfolio to focus
on smartphone & tablets business.
Intels acquisition of Belfast-based Aepona and San Francisco-based Mashery, which offer
software to help manage APIs (application programming interfaces) so partners can monetize
services based on customer context. Aepona's API management tools can track location, device
type and other features tied to a mobile connection, which can act as a basis for communication
service providers to enable transactions such as one-time payments for services. Mashery also
provides software to help partners manage API tools that have been deployed.
Much of the software offered by Aepona and Mashery is for mobile devices and mobile
transactions, which fits with Intel's growing focus on smartphones and tablets.

Intel bought satellite navigation chips business from ST -Ericsson which extends
Intels investments in positioning technology.

Intel Gets LTE-A Smarts with Fujitsu Buy: to help it win design slots in mobile

equipment such as smartphones and tablet computers.

Intel buys Omek Interactive
Omek Interactive provides gesture-recognition technology for a wide array of products, including
electronics, cars, v ideo games, and casinos. The company 's technology uses a sensor to determine
a person's movements and then integrates that data into a target program. The acquisition of
Omek Interactive will help increase Intel's capabilities in the delivery of more immersive
perceptual computing experiences.
Intel has acquired Natural Language Processing Startup Indisys
As with Intels Omek acquisition, there are likely a couple of reasons behind the purchase of
Indisys. The first is that it is part of Intel larger moves into 3D visualization and perceptual
computing, Intels term for gesture, touch, voice, and other artificial intelligence -style sensory
technologies. The second is that voice recognition technology is being worked directly into Intels
processor business.

8.2

By Product Launches:

Intel launches 4th generation Intel Core processors in India

The 4th generation Intel Core processor promises to deliver up to 50 per cent increase in battery
life in active workloads over the previous generation. This is the largest generation-overgeneration gain in the company's history, equating to 9 hours of battery life in active workloads
for some Ultrabooks based on the new processors. The 4th generation processors will also serve
as the foundation for 2-in-1 computing. A 2-in-1 device works as a PC as well as a tablet.
Intel to launch new Haswell chip for fan-less tablets.
The new Haswell chip can fit in chasis designed to cool 4.5 watts of heat. The chip can be clocked
to higher speeds depending on the temperature, it can be limited for compact devices like tablets.
This means that device makers will be able to shrink ultraportable laptops, hybrid devices, and

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International Managem ent Assignm ent Pr oject Report on Intel In side

tablets further without compromising on power and performance. The move is also inline with
Intel's intent to move towards portable devices, tablets and mobile phones in a world where PC
sales are decreasing every quarter.
Intel upgraded Atom chipset for tablets.
The new quad-core chip features Intel's 22nm low-power Silvermont microarchitecture for tablets
which is similar to the Haswell microarchitecture for computers. The major highlight of the chips
is the integrated 4G LTE support.

8.3

By Geographical Expansion

Intel Media Opens Offices in New York, L.A.

The offices put Intel Media closer to the TV networks and production studios.
Intel to build $4 billion chip plant in Ireland
At the new facility, Intel will build its next generation of 14 nanometre microprocessors. If
approved by Intel's board of directors, the two-year project will create 3,500 construction jobs, as
well as, 800 full-time jobs inside the plant once is completed
Intel opens its chip manufacturing facilities to other companies.
Intel Corp has agreed to make chips on behalf of Altera, a significant step toward opening its
prized manufacturing technology to customers on a larger scale, potentially including Apple.
Sharing its manufacturing plants, or fabs, to strategic customers could help the world's top
chipmaker offset the growing costs of developing new technology and help keep the plants
running near capacity as Intel's traditional PC business loses steam.

8.4

Other Investments/plans

Intel in talks with Israel on $10bn investment

Intel, the world's No. 1 chipmaker, will build chips over the next two to three years with features
measuring just 14 nm in Ireland and the United States, but the company is already thinking about
where it will produce 10 nm chips. The narrower the features, the more transistors can fit on a
single chip, improving performance. Intel Israel executives said they would like to see 10 nm
production in Israel.
Intel's quest to become a foundry business may include Apple
A strategic relationship where you're making chips for one of the largest mobile players. It is
possible that an x86-based iPhone is on the way.

8.5

Conclusion

Every month more than 4 million billion (4 x 1015) transistors are produced; more than half a
million for every human on the planet. Most computer chips each comprise more than 7 million
transistors. Twelve years ago computer chips, in the eyes of consumers, were a generally
unknown component of PCs - a commodity product. From a competitive standpoint, a computer
chip is a typical commodity. Take one out, put another in, no performance difference. Chips are
something most customers don't see, many don't understand, and large numbers don't care
about.

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But Intel has built a brand around a commodity. The company was founded in 1968 and went
public in 1971. By 1997 , it controlled 90% of the world's market for personal PC microprocessors.
Although the market is more competitive today, Intel is still the largest chip manufacturer in the
world.

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