It is well known that chip giant Intel has long been dependent on sales of chips into personal computers for the majority of its revenue and a substantial portion of its operating profit. However, as the PC market has continued to be challenging -- particularly following the rise of mobile computing -- Intel has been left to search for new growth areas.
The three big non-PC growth areas that Intel usually cites are data centers, the Internet of Things, and non-volatile memory. The former is quite a large and profitable business for the company, while the latter two opportunities are still relatively small in the context of the just more than $55 billion in revenue that it expects to bring in this year.
Continue Reading Below
In addition to these opportunities, though, Intel is trying to build both a viable mobile silicon business as well as a semiconductor foundry business. Though these businesses are insignificant to the company from a revenue perspective today, there is a chance that they could be material at some point in the future.
To get a better sense of what's going on with these efforts, let's take a look at some of the comments that Intel executives had to say with respect to these businesses on its Oct. 13 earnings call.
A few words on Intel's foundry ambitionsAlthough he declined to talk about specific customers and/or product wins, CEO Brian Krzanichdid say that Intel is seeing "continued growth and continued acquisition of [foundry] customers."
That said, he did caution investors that this business isn't one "that's going to largely move the needle in the next couple of years," which makes sense given the typical design cycles in the world of semiconductors.
However, according toformer Intel Foundry Chief Sunit Rikhi, the business was "on a path to ramping volume to over a billion dollars of revenue run rate," implying that at some point the money should start flowing in.
Shedding some light on Intel's mobile strategyOn the call, Krzanich also offered some commentary about the company's efforts in the mobile market.
Krzanich made it clear that Intel is focused on trying to bring this business to profitability. He said that Intel is on track to reduce its mobile-related losses by $800 million this year from over $4.2 billion last year and that investors should assume that Intel will try to further narrow that loss next year.
In fact, Krzanich seems quite focused on the profitability of this business, noting that the company has been "careful about not chasing the bottom as prices drop." Instead, he claims that Intel has been trying to "figure out where the value is, where [Intel] can go in and make a little bit of money, and actually add some innovation."
In phones, Krzanich said, the company is being even more careful. He noted that Intel's strategy in phones consists of going after the "general phone market" with stand-alone modems and then trying to partner up with other chipmakers such as Spreadtrum and Rockchip for "specific products."
It would seem that Intel will focus on developing key intellectual properties for smartphone processors (i.e., modems, processor cores, etc.), but will increasingly rely on "partners" to take this technology and integrate it into viable mobile processors.
More insight to come next monthAlthough there were some interesting tidbits on this earnings call, there's only so much that the company can talk about in a one-hour conference call, much of which is spent discussing the most recent quarter's results.
Intel said that it will be hosting its annual investor meeting on Nov. 19, which should be an appropriate venue for the company to more thoroughly discuss the company's longer-term strategies to grow its foundry and mobile revenue.
The article Intel Corp. Management Talks Foundry and Mobile on Q3 Earnings Call originally appeared on Fool.com.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.