Agenda Thesis Industry and Company Overview Product Pipeline and Drivers Competition Risks Q&A DCF- Bitching time
Thesis Widening Technological Edge Expanding Portfolio of Products Near-Term Focus, Long-Term Diversification
Mike s Tech Room Silicon Microprocessor Brain of a Computer Multi-core and Multi-thread Lithography and Bit Size Processing Power will TRIPLE by 2011
Moore s Law Processing Power Double Every 18-24 Months. Self Fulfilling Prophecy Software Keeps Hardware on its Toes
Industry Overview 2006 Semiconductor Sales : $247B $300.00 $250.00 $200.00 $150.00 $100.00 $50.00 $0.00 Global Am ericas Asia-Pacific 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
A History of Being First 1968 Founded by Bob Noyce and Gordon Moore 1969 First product launched 1974 Launched the Intel 8080 2007 First general-purpose micro-processor First to produce 45nm chips World s first quad-core processor
Company Overview-Strategy Leap Ahead Energy efficient Improved multitasking Longer battery life Tick-Tock : Tock, i.e. new architecture, is built on Intel's time proven manufacturing strategy (the tick)
Company Overview Key Segments: Digital Enterprise Group 53.5% of Sales High-end products Intel Core 2 Quad Processor Q965 Express Chipset 82566DM Gigabit Network Connection Low-end products Intel Celeron & Celeron D Processor
Company Overview Key Segments: Mobility Group 38.0% of Sales Microprocessors and Chipsets designed for Notebooks and Wireless Connectivity High-end products Intel Core 2 Duo Pentium M Low-end products Intel Celeron M
Company Overview Key Segments: Flash Memory Group Products for cell phones, memory cards, and digital audio players Newco New flash memory company with STMicroelectronics 49% partnership with Micron
Company Overview Global Sales Breakdown: Japan 11% Europe 17% Asia Pacific 51% Americas 21%
Intel Inside Restructuring: 2Q spending as a percentage of revenue decreased 9% Q/Q Laid off 12,200 employees Expected cost savings: 2007: $2 Billion 2008: $3 Billion (30% due to employee restructuring) Operating income increased 26% Y/Y Lowered spending outlook FYO7: Faster factory throughput times Lower inventory on hand
Pipeline Penryn 45nm cool and fast Adapted from Core 2 Duo Wolfdale Desktop Penryn variant Yorkfield XE 45nm Quad Core 4Q07 1H08 Harpertown Quad Core Variant of Penryn for Xeon Server Harpertown LV Low Voltage version Dunnington 45nm Xeon Quad Core
Pipeline Cont d Nehalem (teh 1337) NEW Architecture Integrated Memory Controller Beckton (2009) 8 core Penryn variant Westmere 32nm Nehalem based 2H08 2009, 2010, 2011 Bloomfield XE Montevina Slim, WiMax, Robson 2 Sandy Bridge(2010) 32nm ground up, 8 core Sandy Bridge(2011)? 22nm.
Near-term Growth Drivers Strong chipset order in 2Q07 Mobility group: 23% Y/Y growth in 2Q07 Management guidance Higher 3Q and 4Q chipset revenue Great Server and Notebook sales Edge over rivals 45nm, 32nm chips
Steve Has a Job for Intel
Long-term Growth Drivers Solid State Drives Ultra Mobile PCs WiMax Flash Memory 45.1% ownership interest in Newco 49% partnership with Micron ipods anyone? Emerging markets: Solid international infrastructure 79% revenue from outside US Revenue growth in Asia-Pacific 11% Y/Y
Competition Eggs anyone? Kaboom
Risks Unsuccessful launch of Penryn and Nehalem Failure with transitioning to 45 nm technology Execution issues such as product defects Aggressive ASP and competition from AMD, IBM Inventory glut
Q&A Global Sales Figures Penryn vs Merom Yorkfield vs Kentfield Harpertown vs. Others
Various Valuations
Global Sales Figures Year Number of Employees% outside US 2002 78700 35 2003 79700 40 2004 85000 40 Return to Q&A 2005 99900 50 2006 MID 100000 50 2006 94100 50 2007 E 92000?? Sales by Region 2006 % 2005 % 2004 % Asia-Pacific 17477 49.40% 19330 49.77% 15380 45.49% America 7512 21.23% 7574 19.50% 7965 23.56% Europe 6587 18.62% 8219 21.16% 7355 21.75% Japan 3806 10.76% 3712 9.56% 3109 9.20% Total 35382 100.00% 38835 100.00% 33809 100.00% Sales by Region 2003 % 2002 % 2001 % Asia-Pacific 8403 27.88% 8648 32.31% 9382 35.35% America 12161 40.35% 10073 37.64% 8308 31.30% Europe 6868 22.79% 6139 22.94% 6500 24.49% Japan 2709 8.99% 1904 7.11% 2349 8.85% Total 30141 100.00% 26764 100.00% 26539 100.00%
Penryn vs. Merom Penryn System Merom System 2.80GHz, 800MHz FSB Core 2 Duo T7800, 2.60GHz, 800MHz FSB 6MB L2, dualcore CPU Dell Latitude System D830 Graphics Intel GMA Graphics Intel Driver 7.14.10.12.53 2 x 1GB Hynix Memory DDR2-667 Hard Fujitsu Drive MHW2080BH 4MB L2, dualcore Dell Latitude D830 Intel GMA X3100 Intel 7.14.10.12.53 2 x 1GB Hynix DDR2-667 Fujitsu MHW2080BH TMPGEnc 4.0 Express 4.3.3.9999 Beta (seconds, lower is better) DivX 6.6.1 w/ (seconds, lower is better) Penryn System 151 239 Merom System 20.5 38.9 OS 80GB 5400RPM Windows Vista Ultimate 32-bit 80GB 5400RPM Windows Vista Ultimate 32-bit Return
Yorkfield vs Kentsfield Return
Harpertown vs Clovertown vs Barcelona 2.0, 2.5 Return
Simulating Enterprise Conditions Return