According to Taiwan Media News, Intel CEO Bob Swan ’s new strategy recently “seems to be aimed at himself, but is actually aimed at the enemy”. Because in Bob Swan's view, the era when the processor dominates the semiconductor market has passed. Instead of staying on the throne of the processor leader, it is better to redefine itself and launch an attack.
Bob Swan believes that from the perspective of the entire semiconductor market, Intel's market share is only 30%. In the future AI (artificial intelligence) and self-driving car markets, the protagonist will not be the processor, but may be replaced by FPGA. (Field programmable logic gate array), GPU-led. So why bother to stay on the processor market, it is the leading position of the entire semiconductor market!
Of course, Intel does not have this idea just because of a whimsy. In early December 2019, Bob Swan threw out his views on Intel ’s future when he participated in the investment forum. He said, “I am trying to eliminate the company ’s view that we should strive to maintain 90% of the processor market share because this Limiting our ideas and letting us miss opportunities for major technological changes. We are always thinking about how to protect our 90% market share, rather than how to seize greater opportunities. "
At the same time, from the perspective of the background, as the growth of the PC slows down and the consumer processor market weakens for many years, Intel has adjusted its resource allocation in the past few years, and slowly reduced its investment in consumer market products. The update also caused consumer dissatisfaction. In addition, the turnaround of traditional rival AMD also brought great pressure to Intel.
Therefore, Intel hopes to redefine itself through 3 moves to get rid of AMD's catch-up, but also to be able to challenge the wider market space in the future.
The first trick: reduce marketing costs, increase innovation and research and development
For example, in 2016, Intel significantly adjusted its marketing subsidy plan for the PC market. In the past, Intel's large-scale subsidy was best known as the Intel inside marketing strategy.
But in 2018, Intel announced that it would reduce marketing spending to less than 30% of revenue by 2020. In fact, this program started as early as 2017 and successfully reduced marketing spending from 35.6% in 2016 to 32.8%. Intel used the saved money for mergers and acquisitions, or as a new technology research and development, to expand the layout in related fields such as AI, FPGA, CPU, GPU and so on. In fact, this is not the first time that Intel has "revolutionized its own life." Intel was originally a memory company. It was turned into a processor because of the low price challenge from Japanese manufacturers. This time, Intel reduced the importance of the processor, making it side by side with FPGAs, GPUs and other chips, with a layout of more than 5 years.
Second move: Reorganize the business group, expand the scope of mergers and acquisitions
In these 5 years, Intel is quietly moving its place. Including the acquisition of Altera (Altera) in 2015, obtaining tickets in the field of FPGA, entering the cloud and edge artificial intelligence computing acceleration platform; in order to produce artificial intelligence chips, a large number of companies such as Nervana, Movidus, etc .; in order to enter the field of autonomous driving , Acquired Mobileye in 2017 for a price of $ 15.3 billion.
Now, Intel's PC-based client computing business group, although still the largest contributor to revenue, accounts for more than half of its revenue, but its revenue growth and profitability have gradually become inferior to data center and Internet of Things departments.
In other words, the growth of the PC department is limited, and the pressure of price competition is increasing. Intel naturally wants to spend money on high-margin, more futuristic data centers and AI markets. This is also a more reasonable choice.
The third measure: adjust production capacity and focus on highly profitable products
Earlier in the market, Intel had already handed over lower-end or non-critical products to TSMC's foundry, and its valuable production capacity was reserved for high-margin products. While ensuring the production capacity of its own highly profitable products, it can also compete with AMD for TSMC production capacity.
Through the adjustment of production strategy, Intel's products have no longer been under-supplied recently. The report believes that if Intel is willing to fight further price war, AMD may not be able to prevail. Now, AMD has to be careful, will Intel jam the wafer foundry capacity and launch a scorched-earth war against AMD?
But it is worth noting that Intel still has many issues to be resolved. For example, Intel's process progress and 5G layout are all questionable. Rival AMD is not only satisfied with the increase in market share of the PC market, it has already penetrated into the profitable data center sector earlier, and its market share has continued to rise. For Intel, the next few years will be full of challenges, but if it goes well, we can expect a brand new Intel.