James LeDouxUndergraduate TechTrek West

10 February 2015

Overview• Company Overview• Competitive advantage• Products• Financial Performance• Competition • Intel Capital• Our Contact

Company Overview• Founded in 1968 by Robert Noyce and Gordon Moore• Inventor of the x86 microprocessor• Grew alongside the personal computer (WinTel)• The world’s leading chip producer• 107,000 employees in 63 countries• Mission: utilize the power of Moore’s Law to bring smart,

connected devices to every person on Earth

Leadership

Brian KrzanichCEO

Renée JamesPresident

Andy BryantChairman of the Board

Moore’s Law• Chip performance per dollar doubles every 18 months• The heart of Intel’s mission • Moore’s Wall: the physical limit of processor performance• Barriers of size, heat, and power

• “I frankly didn’t expect it to be at all precise” – Gordon Moore

Competitive Advantage• 10 operating fabs, each costs $4-7b to open• Spends $11.5b in R&D each year• More than the next four greatest industry spenders combined

• x86 architecture (switching costs)• Constantly ahead of the game -- Developing technologies

years ahead of the competition• Scale: low production costs, high chip yield, high margins

Research and Production: Labs and Fabs• Highly protected areas: the Intel bunnies• Research challenge: smaller, cooler, more efficient• Manufacturing challenge: yield• Most recent breakthrough: 14nm chips• Consumes 30% less power• Improved density: 22-35% smaller chip components

• Other lab purposes:• Efficient computing• Transportation• Intelligent connectivity • Cloud• Exploratory research

Intel Products• Processors• Mobile

• Broadwell 14nm chip • Atom 22nm

• PC and Server• Pentium • Core• Xeon

• Chipsets• Boards• Software• Intel Security, developer kits, Wind River custom operating systems

• Solid state drives• Products with Intel inside • PCs, servers, and laptop computers• Tablets and smartphones• Smart objects with embedded systems (IoT)

Mobile and IoT• Mobile• 14nm Broadwell, 22nm Atom Intel’s main mobile chips• Subsidizes $4b in Atom chips to encourage x86 tablet production• Goal to sell 40m tablets with Intel inside

• Sells 46m in 2014• $200m revenue, $4.2b losses in mobile • Projected to cut losses by $800m this year

• IoT• Curie

• Button-sized system on chip (SoC) for wearable tech and IoT• Contains a processor, sensors, Bluetooth, and flash memory

• Wind River • McAafee (now Intel Security)

Financial Performance• IPO in 1971: $23.50 per share ($0.20 adjusted for stock splits)• 2014 revenue reported at $55.9b• Up $3.2b from last year

• 2014 net income of $11.7b• Up from $2.1b from last year

• 2014 stock performance:• Current price: $33.29• 1 year range: $24.06 – $37.90

• Considered a mature stock – modest growth, pays dividends

2014 Stock Prices

Competition• ARM• Licenses chip technologies to producers

• Qualcomm, Apple, Nvidia, Samsung, and others• RISC based vs. Intel’s CISC based x86• Less heat and power use

• Ideal for small, power sensitive devices (i.e. mobile)• Powers over 95% of smartphones and tablets• 10% of laptop chips • Increasing presence in server markets

• Aiming for 5-10% of server market by 2016• Potential disruptor

• AMD• x86 architecture• Approx. 17% of x86 CPU market• In 5% of servers

• Intel’s biggest concern going forward: mobile and server chips

Market Share Today• 88% market share in laptop chips• 84% in desktop chips• 4-5% in tablets, less than 1% in smartphones

Intel Capital• Venture Capital arm of Intel• Established in 1991• Focus: building technology ecosystems• Sectors: Data center software, cloud computing, IoT, security,

wearables, and manufacturing & labs• “Stage agnostic” investing • Invested $62m in 16 startups in 2014

Our Contact• Joy Hopkins • BC MBA ‘05 – International Management and Finance • Previously an International Trade Specialist and International

Business Consultant • Transfer Pricing Specialist at Intel, formerly Financial Analyst and

Manufacturing Engineer

Q&A