Intel Corporation

Introduction

This analysis of Intel Corporation is to educate the investor about the company and provide them with useful information that will enable them to make a decision as to whether they should invest in the company. Intel primarily manufactures semiconductors or integrated circuits containing silicon that are used in computers as computer chips. The purpose of this paper is to provide the investor with facts regarding the company profile, global presence, environmental policies, competitors, and stock performance. After review of the analysis the investor should be able to determine if Intel is a profitable investment. This analysis has been gathered through the use of primary and secondary resources. The primary resources used are mainly interviews with Intel CEO, Craig Barrett. Secondary resources have been the main source through articles that have been gathered using online sources and journals.

Background

In 1968 Bob Noyce, Gordon Moore and Andy Grove founded a new company that built semiconductor memory products, named NM Electronics Inc. Moore and Noyce had problems with the copyright of the company's name as it already belonged to a hotel chain. Noyce, Moore and Grove then changed the name to Intel Corporation, short for Integrated Electronics. The small startup company was founded in Santa Clara, California with $500,000 and funds from investors. In 1971 they introduced the world's first microprocessor, which revolutionized the computer industry. Moore sensed the impending growth of the semiconductor computer chip industry and predicted that the amount of transistors on a single computer chip would double every year. This fact helds true and has been coined as "Moore's Law". Intel's mission is to be the preeminent building block supplier to the Internet economy.

According to the North American Industry Classification System, Intel is classified as a semiconductor and related device manufacturer. This industry comprises establishments primarily engaged in manufacturing semiconductors and related solid-state devices. Examples of products are integrated circuits, memory chips, microprocessors, diodes, transistors, solar cells and other optoelectronic devices. Intel Corporation designs, develops, manufactures and markets its own products. Intel is subdivided into three product lines: Intel Architecture, Intel Communications Group, and Wireless Communications and Computing Group. Intel Architecture is involved with the design and fabrication of microchips, chipsets and motherboards. These products are used by computers and are sold to computer manufacturers and to individuals. Products like the celeron processor and the pentium processor have been key products. These are all components that when integrated create central processing units to be used in computers and other devices. Intel Communications Groupmakes products that help with wireless and land area networks. Intel's newest wireless land area networking technology is called centrino mobile technology and is used in laptops. The Wireless Communications and Computing Group focuses on developing products that can be used with wireless handheld devices and cellular phones.

Intel's main headquarters is located in Santa Clara, California. It is a Fortune 500 company and as of 2003 it employed about 80,000 people around the world. The current chief executive officer is Craig Barret who has been so for the past six years. In 2003 the company reported revenues of $30.1 billion. There are 294 worldwide offices and facilities located throughout the Americas, Europe, Asia-Pacific, and Japan. Intel is the world's largest chipmaker. Other competitors in this industry include Advanced Microsystems Devices and Texas Instruments.

Intel was first incorporated in 1968 as a California company but in 1989 Intel was

re-incorporated in Delaware. The two companies merged so that Intel Corporation Delaware is the surviving company. The stock went public in 1971 and is traded under the symbol INTC in the Nasdaq National Market and as NMS in The Swiss Exchange.

Intel is the world's largest chipmaker, and is also a leading manufacturer of computer networking, and communication products. Intel has created this competitive advantage through its scale of worldwide operations. It has eleven fabrication facilities and six testing/assembly facilities worldwide, and employs 78,000 people in 48 countries.

In an interview, Intel CEO Craig Barrett said "The world is always ready to receive talent with open arms, that's what outsourcing really is." ("Intel Chief...") Intel heavily relies on outsourcing to keep its prices down. About 70 percent of Intel's revenue comes from outside the United States and they believe it is necessary to have resources outside the U.S. to support that. For the last two decades, Intel has had about 40 percent of its employees outside the United States. The company is investing heavily into China where the integrated technology industry is making ground because of low labor costs, tax breaks and large numbers of skilled workers. An example is Intel's newest assembly and testing facility, which will be located in Chengdu, China and will open in 2005. This site will have four factories and employ 600 people. The Chengdu site will focus on the assembly of chipsets. These large investments in manufacturing facilities and research and development demonstrate Intel's long-term commitment to China.

In its attempts to introduce Centrino wireless technology to China, Intel has encountered a major problem. The Chinese government has issued that all wireless technology products must comply with new Chinese security standards otherwise they will be banned from the Chinese market. Intel reported that it is not able to comply with the ruling and has stopped exporting Centrino chips and Centrino technology techniques to China as of June 1, 2004. Intel is unwilling to comply with this adaptation to the new Chinese market because it feels that this new Chinese security standard is not compatible with current international standards and is unlikely to have competitive power.

Intel is committed to creating diversity in the workplace. The company believes it is necessary for its employees to have skills that enable them to operate effectively in a variety of cultural settings and contexts. They provide employees with multicultural training that consists of culture-specific training courses that focus on how business is conducted internationally and how business differs across cultures. Intel reported in 2003 that about 48,000 of its employees worked in the U.S. and 22,000 worked overseas. Intel often takes advantage of work visas that