1. Product launches
Intel is getting into high gear with their Core processor family early on the new year, as they are set to release 6 new desktop processors and 11 mobile processor in January. There will also be 3 new chipsets for desktop PCs and 4 oriented towards mobility.Of most relevance, all processors in the series feature a built-in GPU - for the first time ever it is possible to purchase a CPU that features a built-in GPU that is entirely separate from the chipset. This is known as a General-Purpose computation on Graphics Processing Units (GPGPU) and refers to the technique of using a GPU, which typically handles computation only for computer graphics, to perform computation in applications traditionally handled by the CPU. They also have improved efficiency, allowing them to use less power and generate less heat than existing processors, such as those based on other architectures. It is claimed that the chips provide close to double the processing and graphics performance than their comparable predecessors. The new chips are manufactured using the 32-nanometer process, which makes them smaller and more power-efficient than earlier chips. Based on the Westmere architecture, the transistors are a step away from chips manufactured using the 45-nanometer process.
Intel is getting into high gear with their Core processor family early on the new year, as they are set to release 6 new desktop processors and 11 mobile processor in January. There will also be 3 new chipsets for desktop PCs and 4 oriented towards mobility.Of most relevance, all processors in the series feature a built-in GPU - for the first time ever it is possible to purchase a CPU that features a built-in GPU that is entirely separate from the chipset. This is known as a General-Purpose computation on Graphics Processing Units (GPGPU) and refers to the technique of using a GPU, which typically handles computation only for computer graphics, to perform computation in applications traditionally handled by the CPU. They also have improved efficiency, allowing them to use less power and generate less heat than existing processors, such as those based on other architectures. It is claimed that the chips provide close to double the processing and graphics performance than their comparable predecessors. The new chips are manufactured using the 32-nanometer process, which makes them smaller and more power-efficient than earlier chips. Based on the Westmere architecture, the transistors are a step away from chips manufactured using the 45-nanometer process.
Compared to previous chips, the new processors speed up high-end tasks like graphics display. Related tasks would run close to two times faster than previous chips. Intel has also integrated graphics chips into the new processor package, which could make the chips capable of playing Blu-ray movies or high-definition games.
2. Good valuation
Although Intel is trading on a historical P/E of 49 which looks expensive, earnings are expected to recover signficantly in 2010. Analysts expect earnings to be in the $1.5 range, and this can be expected to increase as economic prospects around the semiconductor market improve. Therefore earnings of $1.5-1.7 in 2010 seem reasonable giving a forward p/e of 11.2-13.5. This compares favourably with others in the sector such as Advanced Micro Devices (AMD) (estimated loss in 2010) or National Semiconductor (NSM) (forward p/e of 21.4 based on $0.7 earnings).
3. Strong fundamentals for enterprise and Consumer chip segments in 2010
As discussed on a previous posting relating to Micron, the fundamentals for PC demand and semiconductors is signifcantly improving in 2010 driven by economic recovery, low inventories, rising prices and the launch of Windows 7.
At just over $20 (52 week range $12.05-21.27), Intel has some very positive attributes. Although the FTC (Federal Trade Commission) in the U.S. announced an investigation into the company's actions in early December and issues with the EU Trade Commission remain, this is expected to impact earnings only marginally if at all. Buy initiated at $20.8
