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Intel Shifts Focus toward Data Center, Internet of Things Spaces

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Intel’s positioning

Intel (INTC) has been working in the semiconductor space for the past 47 years and has grown to become the world’s largest semiconductor chip manufacturer in terms of revenue. In 2015, Intel was ranked 52 among US Fortune 500 companies, up from 53 in 2014. This ranking is based on American companies’ total annual revenues.

Intel is a key supplier of semiconductor chips to the personal computing industry. But with the advent of Internet-connected devices, the company is shifting its focus toward platform solutions that serve the Internet of Things, data centers, and the software industry.

In 1Q15, Intel merged its PCCG (PC Client Group) and MCG (Mobile and Communications Group) into a single CCG (Client Computing Group).

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Intel’s organizational structure

As seen in the above chart, Intel classifies its product offerings under four major segments:

  1. Client Computing Group – This segment supplies chips and hardware for personal computers, smartphones, and wireless and wired communication components. Intel competes with Advanced Micro Devices (AMD) in this segment. AMD is offering cheaper products as a means to gain market share in this space.
  2. DCG (Data Center Group) – This segment supplies server, storage, and network platforms for enterprise, cloud, communications infrastructure, and technical computing. Intel competes with Avago Technologies (AVGO) in this segment. Avago’s acquisition of Broadcomm (BRCM) was a big deal in the data centre market. The combination of these two chip makers have the potential to give Intel a run for its money.
  3. IOTG (Internet of Things Group) – This segment supplies platforms for embedded products that cater to retail, transportation, industrial, buildings, and the home market.
  4. SSG (Software and Services Group) – This segment supplies software products for information security through the McAfee business and other software support services that promote Intel-based platforms.

Later in this series, we’ll discuss these four segments in detail and look at the factors affecting each.

Intel constitutes 18.93% of the VanEck Vectors Semiconductor ETF (SMH).

Correction: This article originally suggested that Intel’s Software and Services Group supplies hardware products as well as software products. However, the group doesn’t supply hardware products. We apologize for this error.

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