Tech Talk-Profile of Intel
Monday, October 13, 2008SUSIE GHARIB: Tomorrow, one of the tech sector's key players, Intel (INTC), rolls out quarterly earnings. After all of the market chaos, it's an earnings report Wall Street will put under a microscope. With $38 billion in annual revenues, Intel is a major driver of the digital economy and the world's leading provider of semiconductor chips. So New York bureau chief Scott Gurvey visited Intel's California headquarters to bring us a profile of the firm.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT NEW YORK BUREAU CHIEF: We often call Intel the semiconductor giant. That's because Intel makes three out of every four microprocessors sold in the world today. UBS analyst Uche Orji says Intel's stock belongs in most portfolios.
UCHE ORJI, SEMICONDUCTOR ANALYST, UBS: We have a buy rating on Intel. We think it certainly is one of the few names in our groups that should be classified as a core holding in technology.
GURVEY: Talk to anyone at Intel, and you are certain to hear about Moore's Law. Co-founder Gordon Moore observed in a 1965 paper that the number of transistors that could be placed on a chip was doubling every two years. Research Director Andrew Chien says Moore's Law is part of Intel's DNA.
ANDREW CHIEN, DIRECTOR OF RESEARCH, INTEL: The challenge of Moore's Law is that if you stand still for two years, you're well behind. So what Intel does is, is we invest something in the neighborhood of, you know, $5 billion to $6 billion every year in R&D. And then on top of that, of course, we make many billions of dollars in investments -- capital investments, for manufacturing and the like, which is critical to our business competitiveness.
GURVEY: Intel is one of the few semiconductor companies which both designs chips and also advances the manufacturing process used to make them. Intel's fabrication plants are usually a generation ahead of its competitors. Smaller rival Advanced Micro Devices (AMD) recently said it's spinning off its fabrication business. AMD has about 25 percent of the processor market. With processor power growing exponentially, Intel research also works to encourage development of applications which will drive demand for that power. Most of Intel's revenue comes from products on the market for less than a year. Multi-processor chips being developed today will enable new graphics applications, and animators at DreamWorks Animation (DWA) are helping with those designs. The multi-processor chips should also improve man-machine interaction. A computer which can recognize images in real time allows a reporter to juggle animated balls. It may someday respond to simple gestures rather than a keyboard or a mouse. Recently released processors are smaller, use less power, and have built-in networking. Andrew Chien says, looking forward, mobility will be essential.
CHIEN: What's getting a lot of traction and driving is the move from computing as something you occasionally have access to, to computing as something as an integrated, dependable, always present part of your lives.
GURVEY: Intel also runs its own venture capital firm, investing in companies it expects will ultimately increase consumption of Intel products. Intel Capital President Arvind Sodhani says Intel invested $640 million in other companies last year.
ARVIND SODHANI, PRESIDENT, INTEL CAPITAL: We have a hundred investment managers located in 25 countries throughout the world, and we have the ability to invest in about 40 countries, and have invested in 40 countries.
GURVEY: The overall effort, according to analyst Orji, makes Intel a company without a peer.
ORJI: They are now in a position where you really cannot compare them to anybody else in the sector. You really can't. You know, everybody else is good at one thing, but not the other, and Intel just seems to be the one of the few stories that is a complete story.
GURVEY: Since 2005, Intel has been run by Paul Otellini. We'll have an exclusive interview with Intel's CEO tomorrow. Scott Gurvey, NIGHTLY BUSINESS REPORT, Santa Clara, California.
