Why Intel’s future is bleak
X86 volume for PC continues to decline, it won’t go to zero as everyone needs at least one PC but I figure it’ll be about 200 million volume with a replacement cycle of about 5-6 years. Just doing that math it is about a billion active PCs which makes sense, as in many homes you only need one PC maybe two as everyone does their thing on smartphones.
Servers the business is still growing, but the margins are so obscene that FB, Amazon, MS, and others simply are not going to sit buy and let Intel rob them for 10 billion dollars a year to the tune of 6 billion profit. All of them will nurture the ARM ecosystem and if for no other reason for price concession, nobody likes to get screwed like they are from Intel. So give another 2 – 3 years there will be custom ARM in the cloud server.
What does intel have then, roughly a little more than 200 million unit business, 40 billion revenue and 3-4 billion profit. To sustain any price for the stock the company will need to shrink to about 40K or less.
Silicon R&D will be cut, process development slow, factories will consolidate, more pain a coming.
Since Intel missed the mobile revolution it is virtuous downward cycle that can’t be broken!
More layoffs are going to come, not a matter of if, but only when, and likely sooner than later as 10nm continues to suffer and the 14nm products are less than compelling and the world wide economy is in turmoil and after November elections even more so