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Can Intel Retain its Dominance Amid Rising Competition?
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Intel Corporation’s (INTC - Free Report) dominance in the high performance computing (HPC) chip market is expected to face severe challenge post Qualcomm’s (QCOM - Free Report) unveiling of a new chip that it plans to sell for server systems.
As reported by The Wall Street Journal, Qualcomm recently unveiled its new processor that will be broadly available in the second half of 2017. The company is a dominant supplier of processors and wireless communication chips for smartphones. Qualcomm now expects the ARM-based chip to provide it a competitive edge in the HPC market going ahead.
Xeon versus Centriq 2400
Qualcomm noted that new energy efficient Centriq 2400 is “competitive” with Intel’s Xeon server chips in terms of speed. Although much detail is currently not available, the chip uses a new production technology that creates transistors with features measured at just 10 nanometers.
Notably, Intel is expected to deliver its first 10 nanometer chip not before the second half of 2017. Further, Qualcomm’s new chip will have up to 48 processor cores, compared with a maximum of 24 for Intel server chips.
Intensifying Competition for Intel
Intel has a dominant market share in the server systems, where the x86 architecture is prevalent. However, intensifying competition from ARM-based chip makers is a significant concern for the company in 2017.
Apart from Qualcomm’s new chip, the second half of 2017 will witness a plethora of new products like Applied Micro's X-Gene 3, Cavium's ThunderX 2, and probably Broadcom's Vulcan. Moreover, Advanced Micro Devices (AMD - Free Report) x86 based Zen is also expected to provide significant competition.
However, the rumoured Intel – AMD partnership related to graphics technology can be a game changer for the company as it will boost its competitive position against NVIDIA (NVDA - Free Report) . (Read More:Intel-AMD Deal Would Be a Win-Win)
Share Price Continues to Suffer
We note that Intel’s stock price has underperformed the broader Zacks Electronic Semiconductors industry over the last one year. While the stock generated a modest return of 2.16%, the sector generated a strong return of 30.17%.
We also note that Intel’s performance is less impressive compared with AMD, NVIDIA and Qualcomm over the same period.
The underperformance of the stock could be attributed to a sluggish PC market, intensifying ARM-based competition, revenue concentration and a failed mobile initiative.
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Can Intel Retain its Dominance Amid Rising Competition?
Intel Corporation’s (INTC - Free Report) dominance in the high performance computing (HPC) chip market is expected to face severe challenge post Qualcomm’s (QCOM - Free Report) unveiling of a new chip that it plans to sell for server systems.
As reported by The Wall Street Journal, Qualcomm recently unveiled its new processor that will be broadly available in the second half of 2017. The company is a dominant supplier of processors and wireless communication chips for smartphones. Qualcomm now expects the ARM-based chip to provide it a competitive edge in the HPC market going ahead.
Xeon versus Centriq 2400
Qualcomm noted that new energy efficient Centriq 2400 is “competitive” with Intel’s Xeon server chips in terms of speed. Although much detail is currently not available, the chip uses a new production technology that creates transistors with features measured at just 10 nanometers.
Notably, Intel is expected to deliver its first 10 nanometer chip not before the second half of 2017. Further, Qualcomm’s new chip will have up to 48 processor cores, compared with a maximum of 24 for Intel server chips.
Intensifying Competition for Intel
Intel has a dominant market share in the server systems, where the x86 architecture is prevalent. However, intensifying competition from ARM-based chip makers is a significant concern for the company in 2017.
Apart from Qualcomm’s new chip, the second half of 2017 will witness a plethora of new products like Applied Micro's X-Gene 3, Cavium's ThunderX 2, and probably Broadcom's Vulcan. Moreover, Advanced Micro Devices (AMD - Free Report) x86 based Zen is also expected to provide significant competition.
However, the rumoured Intel – AMD partnership related to graphics technology can be a game changer for the company as it will boost its competitive position against NVIDIA (NVDA - Free Report) . (Read More:Intel-AMD Deal Would Be a Win-Win)
Share Price Continues to Suffer
We note that Intel’s stock price has underperformed the broader Zacks Electronic Semiconductors industry over the last one year. While the stock generated a modest return of 2.16%, the sector generated a strong return of 30.17%.
We also note that Intel’s performance is less impressive compared with AMD, NVIDIA and Qualcomm over the same period.
The underperformance of the stock could be attributed to a sluggish PC market, intensifying ARM-based competition, revenue concentration and a failed mobile initiative.
Zacks Rank & Key Picks
Currently, Intel, AMD and Qualcomm carry a Zacks Rank #3 (Hold). NVIDIA is a better-ranked stock with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>