Intel (NASDAQ: INTC) investors haven't been a happy lot over the past year as the stock is sitting about where it was last July. The microprocessor giant is dealing with a declining PC market even as it has made big bets on fast-growing areas such as data centers, the Internet of Things, self-driving cars, and high-end PCs. Though these moves have increased the company's revenue of late, they have failed to translate into stock price gains.
And Intel faces competition from the likes of AMD (NASDAQ: AMD) and NVIDIA (NASDAQ: NVDA) in the areas where it's betting big for future growth. Let's take a closer look at three big hurdles the chip giant might face.
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NVIDIA has an automotive lead
Intel is spending billions of dollars to jump on the self-driving-car bandwagon, announcing in March its plan to acquire Mobileye for around $15 billion and partnering this year with BMW and Delphi. But Intel has been late to the game, as graphics chipmaker NVIDIA made its move in this space two years ago, when it launched the DRIVE PX platform.
NVIDIA is now readying its third generation self-driving-car platform, powered by the new Xavier chip, which will start sampling to automakers and component suppliers in the final quarter of 2017. The company has equipped this new platform with more power, with a single Xavier chip packing 80% of the compute power of the DRIVE PX2 platform.
By comparison, the existing DRIVE PX2 platform requires two mobile processors and two graphics processing units. Therefore, NVIDIA can now deliver an identical performance at just a fraction of the power consumption of the earlier generation. What's more, NVIDIA has future-proofed the Xavier chip, as it carries enough juice to enable Level 4 autonomous driving, which doesn't require human intervention under some circumstances.
In fact, NVIDIA believes it can deliver Level 4 autonomous technology by the end of next year. It already seems to be making progress on this front, as it showcased a Xavier-powered self-driving car earlier this year that can learn real-world conditions and then drive accordingly.
NVIDIA is ahead of Intel in the self-driving-car game, as the latter has yet to complete the Mobileye acquisition while its alliance partners will put their self-driving cars on roads for testing in the second half of the year while NVIDIA's self-driving-car system is already being tested in real-world conditions.
AMD is making moves
Intel has long dominated the field in server and CPU chips, but it's now feeling the heat from Advanced Micro Devices' new product line-ups in both segments. In fact, Intel ceded 2% market share to AMD in the first quarter of 2017, according to PassMark, as the latter's Ryzen 7 processor hit the market.
But AMD isn't done yet, as more Ryzen processors are on the way. This could be a big headache for Intel, since AMD is trying to undercut Intel's CPUs by offering more value for the money. In fact, Intel has already been forced to slash its CPU prices to ward off competition from AMD, which could eventually hurt the chip giant's margins.
Furthermore, AMD is looking to strike deeper into Intel's heart with its new server processor known as EPYC. AMD talked up the superior performance of EPYC at the launch event, indicating that it can beat Intel's offerings across several price points. This could trigger another round of price cuts by Intel.
So AMD has the potential to shake Intel's dominance in server chips where it has a near-monopoly.
Intel investors should keep an eye on these two competitors.
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