Intel Corporation’s (INTC) Atom processors are being widely used in netbooks and tablet PCs, which justifies the company’s growing market share. Further ahead, we expect Atom’s market share to grow as it enters the smartphone and tablet form factors. We also expect Atom’s share to benefit from a new range of Atom-based devices such as Google TV, car infotainment systems, IP phones, printers and energy management systems.
We currently have a Trefis price estimate of $26.28 for Intel’s stock, about 22% above the current market price of $21.58.
Rising Netbook Sales Will Boost Atom Share
Atom processors were used in nearly all the roughly 11 million and 27 million netbooks shipped in 2008 and 2009, respectively. iSuppli, a market research firm, estimates that netbook shipments will grow to over 58 million by 2014. This presents a strong growth prospective for Intel’s atom as it currently dominates this segment. 
Smartphones and Tablets Next Growth Market
Smartphones represent one of the fastest growing segments in consumer electronics. Intel’s recent partnership with Nokia in developing Meego OS and its entry into making processors for Android-based smartphones are two very strategic moves from Intel, which can boost its Atom market share.
The tablet market too has grown exponentially after the successful launch of Apple’s iPad and many major OEMs are coming up with new tablet devices. According to IDC, the tablet market will grow to around 46 million shipments in 2014,  which benefits INTC as many new tablets from Asustek, Quanta and Acer will feature Atom.
In addition, better silicon manufacturing processes as compared to competitors will give Intel a significant edge.
Atom Only 2% of Intel Stock
Since Atom processors account for only around 2% of INTC stock based on our estimates, any significant increase in Atom share will not have a significant impact on the stock for the time being. The Trefis community predicts that Atom’s market share will increase from almost 17% in 2010 to 28% by 2013, compared with the baseline Trefis estimate of an increase from under 14% to 20% during the same period. The member estimates imply a small upside of about 2% to the Trefis price estimate for Intel’s stock.
Disclosure: No positions