Intel's Restructuring To Impact Semiconductor Market

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Intel dominate the server and desktop processor markets, including laptops through their "Ultrabook" initiative. However, even after years and billions of dollars, Intel have recently announced they are going to stop trying to break into the mobile System-on-Chip market. Instead, the American semiconductor business is to expand into cloud technologies, the Internet of Things, memory modules, next generation networking and "Moore's law sectors in the future." The South Korean source newspaper has picked up on the story that this brings Intel into direct competition with Samsung, but Intel has retained an investment and exposure to these businesses – it already was, is and will continue to be in competition with Samsung. And of course, as Samsung's semiconductor businesses expand (they are currently the fourth largest semiconductor processor manufacturer in the world and the second by sales) so Intel and Samsung would increasingly find themselves operating in direct competition.

Intel showcased a three dimensional cross point memory chip, which is due to shortly enter mass production and will impede on the server memory market. Currently, Samsung's DRAM and NAND flash drives are a leading provider here. We understand that Intel are planning to manufacturer and supply a range of in-house solid state drives to go alongside their server processors later this year. For the Internet of Things, Intel has already invested a significant sum of money into the technologies. We've seen their Curie and Edison prototyping boards selling for a couple of years now. Intel have partnered with a number of designers to bring high end wearable products to the market: Intel provide the technology and leave the design of the device to the experts. The changes at Intel mean that the Intel Atom set of mobile processors will no longer compete with the Qualcomm Snapdragons and Samsung Exynos chipsets of the world, but instead Intel's push into next generation networking could see their modems competing with other designers – or even cooperating as we may see Intel Wi-Fi and model chipsets employed with other processors.

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Intel is restructuring, shedding around twelve thousand jobs in a move expected to yield approximately $900 million in cost savings. The restructuring and change in business direction has been driven by and is expected to continue to change the whole semiconductor sector. The Intel Atom chipset, a popular choice for inexpensive tablets, is selling reasonably well into a market that is highly competitive and appears to be shrinking. Intel's decision is perfectly understandable: smartphone sales are higher, but few manufacturers are interested in an Intel Atom powered smartphone. Intel's level of investment into next generation products may increase now that they will no longer be developing and manufacturing their mobile chipsets, but much of this technology was shared with the larger, more powerful chipsets anyway. However, losing a chipset manufacturer from the smartphone and tablet universe is not likely to make the remaining vendors lazy whilst Apple are still developing new generation chips every year.