Tag Archives: qcom

Intel Might Dethrone Qualcomm In Apple iPhone 7; PC Sales Atrophy

No. 1 chipmaker Intel ( INTC ) remains in the running for an Apple ( AAPL ) iPhone 7 chip even as the smartphone-maker’s iPad Pro continues to gouge PC sales, a Summit Research analyst said Tuesday. Financially, gaining the iPhone 7 modem would be a “non-event,” accounting for $200 million in sales and 2 cents earnings per share ex items per quarter, Summit Research analyst Srini Sundararajan wrote in a research report. But it would allow Intel to undercut No. 3 rival Qualcomm ( QCOM ) which, teardowns show, has supplied the iPhone modem in at least the past four flagship iterations. Qualcomm has been an iPhone supplier since iPhone 4S, whereas Intel has never supplied an iPhone chip. “The implications from a prestige point of view — getting a socket into the iPhone, is likely to be seen as an achievement for Intel and a loss for Qualcomm,” Sundararajan wrote. ‘Dreadful’ January, ‘So-So’ February In midday trading on the stock market today , Intel stock was down a fraction following the death of former longtime CEO Andrew Grove, 79, a Silicon Valley and tech visionary largely credited with building the company into a powerhouse. He left as CEO in 1998 and left the board in 2004 — both moves precipitated by health issues — but remained an advisor. Sundararajan cut his price target on Intel stock to 38 from 40 on “PC doldrums,” but reiterated his buy rating. Sundararajan is the third analyst since February to cut his Q1 estimates for Intel on the weakening PC unit. Taiwanese PC shipments were “dreadful” in January and “so-so” in February, Sundararajan wrote. And “Apple’s release of the smaller iPad Pro and iPad Pro earlier should continue to cut incrementally into PC sales.” But Sundararajan doesn’t expect Intel to pre-announce new guidance . Intel previously guided to $14.1 billion in sales, plus or minus $500 million, suggesting 52 cents EPS ex items. That would be up 10% and 27%, respectively, vs. the year-earlier quarter. “To a certain extent, we feel that Intel’s mentioning weakness in China was an accurate presaging of what was to come, so we do not think that Intel’s guidance is likely to be that far off from actual results,” he wrote. Sundararajan cut his Q1 views to $13.8 billion and 45 cents vs. earlier expectations for $14.3 billion and 53 cents. He notes that Intel anticipates about $400 million in revenue from its completed Altera acquisition and an extra-week bump. The consensus of 46 analysts polled by Thomson Reuters models $13.96 billion in Q1 sales and 49 cents EPS minus items, up a respective 9% and 20%, on a year-over-year basis. For the year, Sundararajan now sees $57.9 billion in sales and $2.35 EPS minus items, down from $59.9 billion and $2.50. On average, analysts expect $58.77 billion and $2.40, up 6% and 3% vs. the year earlier.

Microsoft, Inphi Plan To Leave Amazon, Apple In Digital Drone Dust

Tech giant Microsoft ( MSFT ) and chipmaker Inphi ( IPHI ) plan to leave Apple ( AAPL ), Amazon.com ( AMZN ) and Alphabet ( GOOGL ) in their drone dust come Q3 … digitally speaking. Early Tuesday, the companies introduced a 100-gigabit platform capable of digitally tying multiple data centers within 80 kilometers (about 50 miles). Previously, that breakneck 100G speed was possible only in cross-country networks. Linking data centers to amass cloud size — and speed — will become more necessary as cloud users like  Facebook ( FB ), Alibaba ( BABA ), Yahoo ( YHOO ) and others expand their online footprint, says Jeff Cox, Microsoft senior director of network architecture. Microsoft realized as much in 2012, but the industry’s “long-haul solution” for cross-country information transit was too hefty for use in metropolitan areas, Cox says. It would be the travel equivalent of launching a Boeing 777 to go from John Wayne Airport near Anaheim, Calif., to Los Angeles International Airport 20 miles away. “You’d take a cab, not a 777,” he told IBD. “For those distances across town, we want these large quantities, but that’s the wrong approach.” Trains, Planes, Trucks … And Drones In 2013, Microsoft and Inphi teamed up to solve the problem. Inphi moves data in the same way FedEx ( FDX ) transports packages — by trains, planes and trucks, Inphi CEO Ford Tamer told IBD. The Microsoft-Inphi solution is a 100G “drone.” Inphi also has a 100G long-haul solution under its Coherent platform. But the Coherent platform is more power-consumptive, expensive and requires space to allow excess heat to dissipate, Cox says. He estimates the Coherent platform uses 20 times more power than the new Inphi-Microsoft platform. “Using the Coherent technology would blow your entire power budget,” he said. “It’s fairly impractical at this scale.” Enter Colorz. Microsoft and Inphi’s partnership will be borne out in the Colorz platform — faster than the industry’s current 10G drones and less costly than 100G long-hauls, Tamer says. The 100G drones are capable of moving the digital equivalent of the Library of Congress multiple times in one second. “We do not believe there is any other solution that can achieve what we’ve done in the power and cost envelope,” Tamer said. “For that type of power and that type of performance and that distance, we do believe it’s an industry first.” Who Needs 640KB RAM? Three years ago, Microsoft met brick walls as it sought to reach 100G inside city limits, Cox said. He referenced tech lore when, in 1981, company co-founder Bill Gates asked who would need more than 640 kilobytes, in defense of IBM ‘s ( IBM ) newest PC, based on an Intel ( INTC ) processor. “Almost kind of like 10 years ago, when people asked, ‘Who needs more than 640KB of RAM (computer memory, where 4GB is now standard)?’ ” Cox said. “Then it was, ‘Who needs more than 100G in a metro?’ I think it was hard for people to wrap their heads around it.” Since then, he says, bandwidth needs have multiplied. Cloud providers are leasing or buying data center spaces across the world as their needs outgrow those of traditional consumers like IT and Internet providers. Data center is the industry’s new buzzword, and chipmakers especially are making a hard run for a piece of this market. Over the past year, Intel, Qualcomm ( QCOM ), Broadcom ( AVGO ), Nvidia ( NVDA ) and Integrated Device Technology ( IDTI ) have redoubled their data center efforts in a bid to gain share. “I think now when we talk about Microsoft, Google, Amazon and Facebook, everyone is building these infrastructures,” Cox said. “And the scale of these infrastructures is surprising everyone in the industry.” He added: “There isn’t so much disbelief any longer. I think we’ve proven we weren’t kidding. In fact, I think we underestimated a little.”

Chip Game On: AMD May Undercut Nvidia With Intel Deal; Who’s In VR?

Advanced Micro Devices ( AMD ) might score an Intel ( INTC ) license deal. It would scoop  Tesla Motors ( TSLA ) partner Nvidia ( NVDA ), which receives $66 million in quarterly royalties from the No. 1 chipmaker, a Needham analyst says. But Argus analyst Jim Kelleher says that Nvidia has distanced itself from the PC market, instead focusing on niche growth areas like virtual reality (VR), autonomous vehicles, artificial intelligence, the Internet of Things and robotics. In VR, Facebook ( FB )-owned Oculus recommends Nvidia and Advanced Micro Devices graphics cards for its Rift series. This week, Oculus announced 30 new titles and demoed the tech at the Game Developers Conference in San Francisco, Calif. Graphics cards are outfitted with GPUs, or graphics processing units. Advanced ones are needed for many of today’s richly visual computing experiences that are computationally intensive — everything from the movement in gameplay to VR and many other kinds of applications. Nvidia’s Intel Royalty To Expire On Friday, Kelleher initiated coverage on Nvidia stock with a buy rating and a 39 price target, a day after Needham analyst Rajvindra Gill reiterated a hold rating on Nvidia stock following the Intel-Advanced Micro Devices rumor. Nvidia is on the IBD 50 list of leading growth stocks. In early trading on the stock market today , Nvidia stock surged 3.9%, trading near 34.10 and in buy range from a 33.16 cup-with-handle buy point. Advanced Micro Devices stock flew higher, up 4.3%, but usually trades considerably lower, near 3. Nvidia’s royalty deal with Intel is set to expire in 2017, and the GPU leader failed in December to defend its patents in a lawsuit against Samsung and Apple ( AAPL ) supplier Qualcomm ( QCOM ). “We don’t litigate for our business model,” CEO Jen-Hsun Huang told investors in November. “We don’t depend on licensing for our business model.” To offset the loss of Intel’s royalty stream — which will impact 2017 earnings per share by 25-30 cents — Nvidia needs to add $470 million in annual revenue, Gill wrote in a research report. He noted that Intel can continue using Nvidia patents filed before March 31, 2017. “While Nvidia has expressed interest in monetizing its GPU patent assets, we have seen little evidence to date that this will materialize,” he wrote. Nvidia controls 75%-80% of the GPU market, having long ago ceded the gaming console market to Advanced Micro Devices, which provides its RADEON semi-customized chips to Sony ( SNE ) and Microsoft ( MSFT ). Nvidia Shifts To Gaming In 2013, PC sales accounted for 42% of total Nvidia revenue. In 2016, gaming, enterprise graphics, data center and automotive brought in 85% of total revenue, dropping PC sales down to 9%. IP brought in 6%. Gaming represents a $20 billion market opportunity for Nvidia, leading $8 billion, $6.5 billion and $5 billion opportunities in the artificial intelligence, enterprise graphics and data center markets, respectively, Kelleher wrote. In fiscal 2016, gaming (largely PC) generated $2.8 billion of Nvidia’s total $5.01 billion in sales, up 30% year over year. Nvidia targets 5%-10% annual growth “based on gamers’ insatiable desire for improved graphics in games,” he wrote. Nvidia also pulled in $750 million in enterprise graphics, $340 million in data center and $320 million in automotive. In fiscal 2016, Nvidia’s automotive segment grew 80% year over year and includes Nvidia-Tesla-partnered GPUs. The U.S. Department of Energy selected Nvidia’s NVLink interconnected technology coupled with IBM ( IBM ) processors to power its next-generation supercomputers, 10 times faster than current supercomputers. Kelleher recognized that 2018 earnings might flatten as Nvidia makes further investments in “growth niches.” “We regard this as an acceptable trade-off for building share in markets that could drive significant growth in years to come,” he wrote.