Chipzilla’s efforts to push into the mobile arena are paying off, but the fashion bag maker is still in a holding pattern waiting for Ultrabooks to take off, according to an analyst from Morgan Stanley.
According to Barrons, Joseph Moore, for it was he, rated Intel as an underweight and set a $20 price target for its shares, saying that the outfit could hold its own against competitors in the battle for tablets based on Microsoft’s Windows 8.
Tragically that will not help the company’s bottom line much. He said that last week’s Silvermont CPU core announcement for mobile devices suggested that people should be a lot more optimistic about Intel.
Moore praised Intel for making great strides in optimising its Atom architecture for the performance per watt needed for ultra-mobile devices and expects Intel selling 50 million of its Atom line of processors for tablets through 2015. This is four percent above current expectations.
He believes that sales of tablets next year will be $282.8 million and will rise in 2015 to $327.5 million, respectively. Moore said that about 13 percent in 2014 will be based on Microsoft’s Windows 8, and 16 percent in 2015. The rest will be Apple and Google gear. The Atom might take almost eight percent of Android shipments, and 75 percent of Win 8 tablets, and the combination, 36 million shipments in 2014 and 50.2 million in 2015, would produce $722 million and $1 billion, respectively, in revenue, at an average price of $20 per chip.
For Chipzilla to get any real meaningful financial uplift from mobile devices, the company must see success with its higher priced Haswell based chips in Ultrabooks and hybrid computers.
He was curiously optimistic about Intel’s progress in ultra mobile. If Intel can use new form factors to mitigate tablet cannibalisation altogether it will allow them to maintain traditional profits, which are unmatched by any other semiconductor end market, he reckons.
But he thinks that higher end Ultrabooks are “somewhat challenging” as $200 for touch panels, SSDs, and thin form factors, providing high end detachable and convertible form factors is a lot of money.
“If Ultrabooks are going to return the industry to growth, there is implicitly the assumption that PC ASPs will rise, which historically speaking has been a difficult proposition,” Moore wrote.