) plans to acquire the wireless business unit of Infineon
Technologies AG in an attempt to deepen its penetration of the
mobile device market.
Historically, Intel has focused on producing chips and
processors for PC manufacturers competing with the likes of AMD (
) and nVIDIA (
), and we see its recent move as a way for the company to broaden
its business focus and participate in the growth of the mobile
Together with its Atom processors, we expect higher revenue
growth from the mobile chipset segments, which currently accounts
for just under 9% of the Trefis price estimate. Higher chipset
growth could represent an additional 8% upside to the scenario we
include below.We have a current
Trefis price estimate of $26.50
, which is about 30% ahead of the current market price.
Broadening its Mobile Business
Intel's ultra low voltage Atom microprocessors were introduced
initially to power netbooks and small desktop computers. However in
early 2010, Intel launched Atom processor for smartphones and
Atom opened the door for Intel into a lucrative but crowded
smartphone market populated by well established and formidable
players.Given the more fragmented market than its dominant PC
business, the company needed a range of mobile phone offerings in
order to compete effectively.
Infineon's products are currently used in mobile devices made by
), Nokia (
(NASDAQ:RIM), and we believe this latest move will help Intel
establish a significant presence in the mobile market.
Smartphones Growing Faster Than PCs
IDC estimates that in 2010, mobile phone vendors will ship
nearly 270 million smartphones compared to 173.5 million in 2009,
an expected growth rate of 55%. This growth rate is double
the expected growth for global PC shipments.
We estimate that Intel's mobile chipset business grew from $2.4
billion in revenues in 2005 to about $4 billion in 2009. We
currently estimate that this will grow to nearly $6 billion by the
end of our forecast period. However, given the rapid rate of
growth in the smartphone market, our estimates may prove to be
significantly conservative. If mobile chipsets grew to be a
$10 billion annual revenue business for Intel, there would be 8%
upside to the current Trefis price estimate for Intel.
You can see
the complete $26.50 Trefis price estimate for
Intel's stock here.