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Intel Roundup: Earnings, Micron & ARM Deals, New Chips, More

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October has been a busy month for Intel (INTC - Free Report) , with stellar earnings, the announcement of its next generation products, big deals with ARM and Rolls Royce, parting ways with Micron (MU - Free Report) and more. Here are the details-

Earnings

Intel reported a solid quarter with revenue and earnings beating the Zacks Consensus Estimate by 17.8% and 5.8%, respectively. Both its data centric (current focus area) and PC centric (area of traditional strength) contributed to the performance. Most importantly, both businesses garnered improvement in volumes and prices.

The PC business gained from upgrades by businesses, spurred by Microsoft ending support for older versions of Windows in developed countries and increased buying by gamers. Apple’s (AAPL - Free Report) modem business also helped no doubt. Guidance was also better than expected. China tensions aren’t bothering the company as of now, but could be a factor in the long term if trade tensions with the U.S. continue. Read more: Intel Beats on Q3 Earnings & Revenues, Ups '18 View.

Micron May Buy Intel Stake In JV

Micron announced that it was taking full control of the Intel-Micron Flash Technologies (IMFT) JV, months after the companies said they would be taking their 3D Xpoint technology development in separate directions. Intel was first to market, although there’s nothing to suggest that Micron won’t catch up.

3D Xpoint is basically a cross between the DRAM and NAND technologies offering non-volatile storage at significantly higher speeds than NAND and significantly lower cost than DRAM, making it suitable for a range of functions, but most notably in gaming and data center.  

The deal terms reportedly require Micron to pay Intel $1.5 billion in cash and assume its $1 billion debt to the JV. Prior agreements require Micron to sell Intel 3D XPoint wafers up to a year after the deal's closing. Its Dalian fab will probably shift into gear after that. In its latest quarter, Intel took a $290 million charge as a result of Micron’s decision to buy out its portion of a memory fabrication plant in Utah

Intel however says that the announcement had come too soon, its written statement reads: "They can't officially make the call until January 1, 2019," and "The operation of the IMFT factory would not change until after the close of the call, which is at Intel's discretion for up to one year."

New Chip Lineup

Intel has announced the 9th generation of its Core desktop processors for gaming enthusiasts and content creators in particular, to ship in November. The X series as it’s being called is still built on its 14nm process but includes support for Optane-based memory sticks, quad DDR4 memory channels modifications to deal with the Spectre and Meltdown attacks and more.

The greater number of threads and cores should help it take on Advanced Micro Devices’ (AMD - Free Report) recent chip advancements although it’s worth keeping in mind that AMD’s 7 nm chips are around the corner. So Intel will probably have to do more to contain AMD. The smaller company doesn’t have its own manufacturing facilities however and also has a significantly smaller R&D budget, so Intel may still have the last laugh after all.

ARM-Intel Agree

Softbank-owned ARM and Intel have finally found some common ground, i.e. that they both have something to gain from the proliferation of IoT devices.

ARM gains from the number of devices themselves because they require processors built on its low-power designs by companies like NXP, Renesas and Microchip's Atmel. Himagiri Mukkamala, an ARM senior vice president and general manager for its IoT Cloud Services, expects 100 billion ARM-based IoT devices in the next four to five years with the number going up to a trillion over the next two decades.   

Intel gains from the number crunching that goes on with respect to the data captured by ARM-based IoT devices.

Both gain when the devices operate in a secure environment. And that’s why ARM's Pelion IoT management platform will use Intel's Secure Device Onboard specifications for automation and management of IoT devices, network connections and data transfers.

Rolls Royce Partnership

Intel is helping Rolls Royce take the autonomous car concept to ships, with the goal of helping cargo ships operate more safely, efficiently and cost effectively by minimizing crew members and using the extra space for more cargo.

So the ships will come equipped with similar technology, including Rolls-Royce's Intelligent Awareness System (IAS) that uses sensor fusion for enhanced decision making, combining data from LiDAR, radar, thermal cameras, HD cameras, satellite data and weather forecasts.

Each vessel can capture up to 1 TB of data per day that is then captured and stored using Intel's Xeon Scalable processor-based servers so that it can be downloaded and analyzed for additional insights once the ship has docked.

"This collaboration is helping us to develop technology that supports ship owners in the automation of their navigation and operations, reducing the opportunity for human error and allowing crews to focus on more valuable tasks," said Kevin Daffey, director, engineering and technology and ship intelligence at Rolls-Royce.

ASML Stake Reduced

Intel along with other chipmakers like Taiwan Semiconductor Manufacturing Co TSMC had purchased stakes in ASML Holding N.V. (ASML - Free Report) back in 2012 when the company was trying to fund the development of its advanced lithography systems. The stake has been reduced over the years and with the latest sale, is now at just under 3%, according to Reuters.

Recommendations

Intel shares carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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