The last six months haven’t been easy for Intel Corporation (NASDAQ:INTC). Starting the end of 2017, the company has had to put up with a lot of challenges. These include a potential loss of big-name customers, major security vulnerabilities, product delays and resurgent rivals. The company also closed down a new product lines and has had to endure several lawsuits over the massive stock sale commissioned by the CEO.
However, despite all these challenges, the company’s stock has been performing well. Additionally, the company has posted impressive financial results over the same period.
The new threats on core businesses
The company‘s core business is in the PC and server chips and the company has dominated the market in the sector. Although the company has been experiencing stagnated sales in PC chips, its profits from these chips have increased, with $12.9 billion in income posted in 2017 from the PC chips alone. This represented 22% from what was posted in 2016.
The company’s data center chips have also posted growth in sales. They earned the company $8.4 billion in income in 2017, which represent a 16% increase from 2016.
However, there are several reasons to worry when it comes to the two businesses. For several years, sales from PC have been going down. Although the market has been showing signs of stabilizing, there is very little hope that it will rebound back to full growth.
Growing competition
Although the company is currently recording some sales, there is growing competition in the sector. Advanced Micro Devices, Inc. (NASDAQ:AMD), which is Intel’s main rival in PC chips has been stumbling for many years. AMD’s latest processors have presented a lot of competition to Intel’s chips.
Loss of manufacturing lead
There are several signs that Intel has squandered its manufacturing lead. For many years, the company has been struggling to produce chips using its next generation of technology, which is internally referred to as 10-nanometer node. The company was supposed to do away with the chips in 2017 but currently are available in small quantities.
Apple may be ditching Intel
In the wake of growing competition, Intel is also looking at a potential defection of its key customer-Apple. Recent reports have indicated that Apple intends to ditch Intel’s chips for its own A-series chips which it uses in iPads and iPhones
