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Intel And ARM Focusing On Mobile, Consumer Electronics

Posted on Wednesday, Mar 28th 2012

According to a recent report by iSuppli, the mobile handset semiconductor market is projected to grow to $58.6 billion by the year 2014. The researcher estimates the smartphone and tablet semiconductor markets to be worth $77 billion by 2014. Reports estimate that media tablets will be the world’s fourth-largest semiconductor consumer in the next years. In 2010, media tablets were the 35th-largest semiconductor consumer. In 2010, semiconductor sales to tablet manufacturers accounted for $2.6 billion. That number is projected to grow to more than $18.4 billion by 2014. Intel’s Financials
Intel (Nasdaq:INTC) saw their semiconductor market share grow to 15.5% in 2011 compared with 13.1% a year ago. iSuppli estimates that worldwide semiconductor sales during the same period grew 1.3%.

Intel reported Q4 revenues of $13.9 billion, growing 21% over the year and ahead of the Street’s target of $13.7 billion. EPS of $0.68 was also ahead of the market’s projection of $0.61.Revenue growth was driven by growth in the PC client group, which grew 17% over the year to $9 billion. Revenues from server chips for data centers grew 8% over the year.

For the current quarter, the company is targeting revenues of $12.3 billion-$13.3 billion, ahead of the market’s projection of $12.8 billion.

Intel’s Acquisitions
The company has been scouting out acquisitions for additional technologies. Recently, they announced the acquisition of a 10% stake in Sweden-based Tobii Technologies for $20.8 million. Tobii’s technology helps users to control PC behavior using the user’s eyes. Their eye tracking technology reflects a pattern of infrared light in a user’s eyes that is interpreted by the computer to determine what the viewer is looking at on the screen. Earlier this year, they bought video codec software and about 190 patents and 170 patent applications worldwide for $120 million from Real Networks, a provider of multimedia software. Through the acquisition, Intel plans to be able to offer “richer experiences”  across multiple devices.

They also bought product lines of and certain assets related to InfiniBand from QLogic Corp for $130 million. The acquisition is expected to help Intel grow their networking portfolio to provide scalable high- performance computing fabric technology and support their vision of innovating on fabric architectures to improve performance.

Intel’s Product Expansion
Intel recently launched their newest high-end Xeon server chip. The chip is targeted to help address the growing cloud computing market along with social networking and the mobile device segment. Intel claims that the Xeon processor shows performance improvement by more than 80% and uses less energy as well.

Their stock is trading at $28.19 with market capitalization of $140.8 billion. It touched a 52-week high of $28.26 earlier this week.


ARM’s Financials
Growth of the tablet market is helping fuel the rise of U.K.-based ARM’s (Nasdaq:ARMH) market share. ARM is the dominant supplier to Apple for their iPhone and iPad products. ARM is looking to capture a 50% share of the entire mobile market by the year 2015, compared with the 10% share reported last year.

For the recently reported fourth quarter, ARM saw revenues grow 21% over the year to $217 million. The market was looking for revenues of $193 million in the quarter. EPS also grew an impressive 21% to $0.17, ahead of the market’s targeted $0.14. Shipments of ARM-based chips for mobile phones and mobile computers grew 10% over the year to 1.2 billion chips, and shipment for chips for consumer embedded services grew 40% to over 1 billion.

By segment, license revenues grew 21% over the year to $78.9 million. Royalty revenues for the quarter grew 22% over the year to $114.7 million.

ARM is forecasting current quarterly revenues at $200 million and expects to end the current fiscal with $860 million. The Street was looking for revenues of $197.2 million for the quarter and $851 million for the year.

ARM’s Product Expansion
ARM continued to expand their product portfolio. Recently, they announced the launch of a new energy-efficient microprocessor design. The new microprocessor is expected to expand the reach of microcontrollers and bring the Internet to a bigger range of devices such as home consumer electronics like refrigerators, medical equipment, and energy meters, to name a few. The new design will provide chip-makers with the capability to build microcontrollers that require “ultra low power” and are capable of 32-bit processing. These new microcontrollers are estimate to use a third less energy than current ones.

ARM is also looking to expand in the server market. Last year, they entered into an agreement with HP to launch a new line of servers that would operate on ARM chips. Since then, the company hasn’t made significant progress within the server market. However, management recently announced that they will be able to market their 64-bit processor design to the server market by the year 2014. At present, ARM’s 32-bit processors do not meet with most software applications needing 64-bit processors.

ARM’s stock is trading at $28.64 with market cap of $13.13 billion. It touched a 52-week high of $32.18 in May 2011.

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