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What’s Intel’s Plan for Its PC Business in 2018?

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Intel’s PC business

Intel (INTC) is transitioning to the fast-moving data-centric business that will likely be at the heart of the future connected world. However, it’s still making efforts to maintain its dominance in the PC (personal computer) processor market by focusing the growth segment of notebooks, especially gaming notebooks.

Moreover, the company is accelerating its efforts in the modem business. These efforts are driving growth in its CCG (Client Computing Group) segment.

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Client Computing Group revenue

Intel’s CCG revenue rose 3.3% YoY (year-over-year) to $34 billion driven by 5% YoY growth in notebook processor volumes and 2% growth in their ASPs (average selling price). Intel’s modem business rose 26% YoY (year-over-year) in 4Q17 as it replaced Qualcomm (QCOM) modems in more Apple iPhones.

Intel witnessed a 5% fall in desktop processor volumes as Advanced Micro Devices (AMD) took some of its market share with its range of Ryzen desktop processors. Intel responded to AMD’s competition with the launch of its i7 Kaby Lake processors in 4Q17. This release pushed Intel’s CG revenue up 1% sequentially in 4Q17, but on a YoY basis, it fell 2%.

Data from German online retailer Mindfactory showed that sales of AMD’s Ryzen CPUs started overtaking those of Intel in August 2017, but the blue-chip giant regained its top spot in December 2017 and January 2018 with the i7.

According to a TweakTown article, Dell EMC’s chief technology officer, John Roese, stated that Intel is clearly a dominant player in the computer chip market given the breadth of its portfolio offerings. He acknowledged that AMD has improved its portfolio but said that it remains a second-place player and more of a challenger to Intel.

CCG profits

While its revenue was strong, CCG’s operating margin contracted from 40.6% in 3Q17 to 36.4% in 4Q17, as the quarter included the cost of transition to 10 nm (nanometer) technology. However, CCG’s 2017 operating margin rose to 38% from 32.3% in 2016.

However, the CCG segment was hit by the design flaws Meltdown and Spectre, which make chips vulnerable to security attacks. As the company fixes this flaw, the segment could face a weak 1H18. Industry experts believe that consumers could delay their purchases to the end of 2018, when the company promises to launch a hardware fix for this problem.

Intel is also preparing to launch gaming laptop CPUs integrated with AMD’s Vega graphics card. We’ll look into this next.

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