Intel Will Rocket Upward On Improved 'Power Equation'

Apr.17.12 | About: Intel Corporation (INTC)

Intel (INTC) is the leading company when it comes to processors for PCs, but it has been struggling to provide the same quality of product for tablets. Consequently it has, of late, started focusing its attention on designing processors that will work in the new product Intel is launching, the Ultrabook. This focus may be just what the company needs to get a foot in the door of the tablet market.

On top of that, it has developed a strong interest in creating processors that can be used in multiple different mediums. For example, Intel's Ivy Bridge quad-core processor, designed to run in MacBook Pros successfully thanks to its heat-efficiency, has recently been developed and is even on track to be released earlier than initially expected.

In addition, Intel has recently chosen to partner with Maxthon. Specifically, what Intel and Maxthon will be collaborating on is the optimization of GPU browsing technology for Intel's next generation of CPUs. It is my belief that both companies will benefit from this collaboration as the end result will be "a vastly-improved GPU-accelerated browsing experience" and will improve the quality seen in areas such as video and gaming.

Moreover, Intel and Maxthon plan to work together to increase the speed of the web for everyone by working closely together at the chip level. I'm encouraged to see Intel bring a partner in for its latest technological development. As the GM of Maxthon International stated "Partnerships like this are building a firm foundation for more innovation and improvements down the road". Signs of positive future developments like this in a company give investors a reason to buy and stay with the company.

Intel is involved in a number of innovative products and partnerships at present, but despite all of its advancements, it is still dwarfed by companies such as Microsoft (MSFT). The main reason for this is the diversity that Microsoft has achieved in the technological sector. What this means is that Microsoft is able to "cross-sell" between the different sectors with which it has become involved, whereas Intel has not yet achieved this level of diversification and has limited options. Other competitors, such as Qualcomm (QCOM), are in the same position as Intel, which may make stronger competitors and more immediate threats-- especially as it continues to see a large growth in earning estimates. For it to compete, Intel needs to consider expanding in the way Microsoft has, allowing it to outperform the Qualcomms of the market.

One example of how Intel is working towards this goal is its move to power the 'infotainment' systems that will be present in new Nissans. This is clearly a move on Intel's part to "broaden beyond its core PC market" and work towards greater diversification. The chips that Intel will be providing for the motor vehicle company will power the navigational and entertainment systems in the new Nissan models. Apart from that, it will also be working closely with Nissan in further research projects. These include video vehicle surveillance, among others, once again demonstrating a desire to move forward and create a positive future for the company.

The partnership with Nissan is not without its difficulties. For example, Intel needs to have a look at its software in order to make the project work as most cars do not have the ability to accommodate the separate memory microchips that usually form part of Intel's systems. Despite these difficulties, the move to partner with Nissan still makes Intel an interesting prospect for future growth.

Intel has been criticized, lately, for its apparent inability to get the power equation right in its mobile technologies. The problem has been a disappointment for both the company and its investors. This will be one of the main factors in endeavors aimed at increasing the battery life of mobile phones by reducing the amount of power used. This information has promising implications for the future success of the company, especially with reports of consumers dissatisfaction concerning smart phone and tablet battery life.

Intel has been successful in increasing battery life in three separate areas by a) using digital phase lock loops that are easier to build than the traditional analog counterparts and that use about one-tenth of the energy, b) utilizing smaller transistors in its products, and c) using near-threshold computing. If Intel is successful in "powering down", then the company can be expected to grow significantly.

In addition to this, Intel has been working on a Medfield Atom chip to be used in mobile devices. This is being developed by Intel in attempt to get a firmer foothold in the mobile industry and to focus on developing processors that can be used in more than just PCs. If it were to be successful, this would represent an enormous step for the company. Intel certainly has a lot of catching up to do-- especially as competitors like Texas Instruments (TXN) continue to provide innovative solutions to the market-- and the hope is that Intel's new chip will help it lessen the gap.

Intel is considered to be undervalued at its current price of around $28 per share. The company's future is a big question mark, as it forges new partnerships but continues to lag behind its competitors. What we can infer form Intel's most recent movements is that it is aware of its shortcomings and that the company as a whole is working towards compensating for it. Should everything go according to plan, the future of the company could be very strong -- especially if the mobile technologies pan out. As experts are quick to point out, semiconductor sales are slow and will be getting slower, so it's more important than ever for Intel to use its resources for expansion.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.