Intel applies for new 162,000 sq ft development

IRELAND IS set to become one of the sites to produce Intel’s next generation of microprocessors. The tech giant, currently the largest private sector employer in the State, has applied for permission to build a new 162,000 sq m plan at its Leixlip site, which will be one of three sites to make 14 nanometer chips.

The decision was due last week, but the council has requested more information on the application. If it is granted permission, the new plant at Leixlip, Co Kildare, could generate up to 1,000 jobs and boost the local economy.

The plant is not only important to the Irish economy, it’s an important step for Intel. The company needs to stay ahead of the game with faster, more efficient chips.

At one time, an Intel processor would have been the only thing considered by consumers. The company’s technology set a standard that rivals strived to meet.

Although Intel still powers 80 per cent of the world’s PCs and is still the top chipmaker, it is facing challenges. The ongoing economic turmoil has taken its toll on sales, and PC shipments are falling as consumers go mobile.

Research from Gartner showed that shipments of personal computers all but stalled in the second quarter, extending the current trend for anaemic growth. Shipments fell by 0.1 per cent to 87.5 million units, tallying with figures from IDC.

The impact can be seen on Intel’s figures. Its third-quarter sales forecast fell short of some analysts’ estimates, predicting $14.3 billion in revenue compared with $14.6 billion pencilled in by observers. The company is now turning to emerging markets to boost revenue growth, which it says will be an overall rise of 3 per cent to 5 per cent for 2012 – again lower than previous estimates.

Advanced Micro Devices, Intel’s main rival in the PC processor market, has seen its sales drop on weakness in Europe and China. According to Intel’s Paul Otellini, Intel has taken some market share from its rival in the low-end laptop and desktop market.

Intel, for its part, is supporting a new category of Windows-based notebooks, known as ultrabooks, in an attempt to stimulate demand. The thin, light and high powered machines are aiming at the market that Apple has captured with the Macbook Air – which also uses Intel’s Core i3m i5 and i7 chips – and feature technology such as solid state hard drives.

Intel is confident that the devices will be a success, despite a hefty price tag and fears from some analysts that advanced features planned by some manufacturers may push them out of the price range of some consumers. Otellini said ultrabooks will account for 40 per cent of consumer laptops sold this year, which, if realised, will mean a nice sales generator for Intel.

There may also be a boost in PC sales from the upcoming release of Windows 8, but consumers are holding off investing in new devices until the new operating system emerges.

“Consumers are delaying purchases, and vendors and retailers are slowing down their PC activities to clear existing inventories,” said David Daoud, IDC’s research director for personal computing,.

Intel isn’t solely reliant on the PC market. Its data-centre group makes microprocessors for server machines; that sector rose 15 per cent in the second quarter.

“They’re definitely recognising the weakness out there,” said Patrick Wang, a New York-based analyst at Evercore Partners. “Margins were fairly robust. Data centre continues to work for them.”

One area where Intel has faltered slightly is in the tablet and mobile device sector.

Although the tablet market is small, demand is increasing at a faster pace than in the PC market, with shipments predicted to increase by 90 per cent in 2012, according to iSuppli.

But although Intel’s low-voltage Atom chip promised a lot initially, its success has been somewhat limited. On the other hand, British firm ARM has been busy carving out a niche for itself supplying its technology to mobile device firms including Apple. Samsung, Qualcomm and Nvidia have pushed for faster processors, with multiple cores as mobile makers strive to win over consumers with faster, more powerful smart devices.

But if Mobile Word Congress this year is anything to go, Intel is preparing itself for a fight in what could be a crucial sector. Announcing partnerships with Orange, Lava and ZTE at the event, Otellini outlined a roadmap for the firm that was described by many as ambitious. Mobile chip sets based on 22nm are planned for next year, with 14nm on track for the year after. Intel-based Windows tablets are on the way too – although a lower-priced ARM version will also be available.

With Intel determined to hang on to its position at the top of the market, it seems the industry is in for some interesting times ahead.

– Additional reporting Reuters / Bloomberg