Share price at time of writing: $23.71
The main reason behind my now negative/neutral (down from positive) view of Intel's stock is my realization that the smartphone industry's trend of vertical integration will soon spread to microprocessor design.
In my last article on Intel (INTC), I pitched 20% upside in the following 12 months due to gains in mobile chip market share (here). About a month later, Apple's (AAPL) new iPhone 5s release has revealed technological trends that I think undermine my investment thesis.
With a combination of design and manufacturing improvements, and in cooperation with Samsung (SSNGY.OB), Apple has created by far the fastest mobile chip to date, and it has done so in a way that Intel cannot achieve - by integrating chip design with the rest of its hardware and software design. I believe that this is a trend that Samsung (already does it), Google (GOOG), and Microsoft (MSFT) will eventually have to follow, and with the resources that they each possess, the transition could happen fairly quickly, either through major acquisitions or internal R&D. With this development, Intel's stock is no longer attractive as a long-term hold. Read more
The main reason behind my now negative/neutral (down from positive) view of Intel's stock is my realization that the smartphone industry's trend of vertical integration will soon spread to microprocessor design.
In my last article on Intel (INTC), I pitched 20% upside in the following 12 months due to gains in mobile chip market share (here). About a month later, Apple's (AAPL) new iPhone 5s release has revealed technological trends that I think undermine my investment thesis.
With a combination of design and manufacturing improvements, and in cooperation with Samsung (SSNGY.OB), Apple has created by far the fastest mobile chip to date, and it has done so in a way that Intel cannot achieve - by integrating chip design with the rest of its hardware and software design. I believe that this is a trend that Samsung (already does it), Google (GOOG), and Microsoft (MSFT) will eventually have to follow, and with the resources that they each possess, the transition could happen fairly quickly, either through major acquisitions or internal R&D. With this development, Intel's stock is no longer attractive as a long-term hold. Read more
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