Intel Corporation – Short-Run and Long-Run Strategic Goals
Introduction
Intel Corporation is an American multinational technology company headquartered in Santa Clara, California. It is one of the world’s largest semiconductor chip makers and is the developer of x86 series of microprocessors, which have become the primary processor of personal computers since the early 1990s. Intel has played a major role in advancing technology through its constant efforts to improve chip performance. This article analyzes Intel’s short-run and long-run strategic goals based on its activities and strategies over the years.
Short-Run Strategic Goals
Intel’s short-run strategic goals focus on maintaining and improving its key product lines to stay competitive in the rapidly evolving semiconductor market. Some of Intel’s prominent short-run goals are:
Sustaining Process Technology Leadership: Intel has focused on improving processor architecture and shrinking transistor sizes through advancing process technology nodes on a regular basis. Its short-run goal is to remain at the forefront of process technology by transitioning its CPU and GPU products to smaller nanometer process nodes in a timely manner. Intel aims to manufacture chips at the 10nm process in high volumes by 2021 to stay ahead of rivals.
Retaining CPU Market Leadership: x86-compatible CPUs have been Intel’s cash cow for decades. Its short-run strategic goal is to defend this market leadership by continuing to enhance CPU performance through architecture optimizations and process advancements. Intel focuses on shipping newer CPU generations with IPC (instructions per clock) gains and modest clock speed boosts on a yearly schedule to maintain appeal versus competitors.
Expanding Presence in Adjacent Markets: Intel recognizes that the traditional PC market is maturing. Its short-run goal is to bolster positions in adjacent high-growth markets like data centers, Internet of Things, automotive, and 5G networking using its manufacturing prowess and technology expertise. Intel aims to increase server CPU market share and capture opportunities in memory/storage solutions.
Delivering on Promised Products: Setbacks in 10nm CPU ramp caused Intel short-term performance issues. Its goal now is to ship 10nm-based ‘Ice Lake’ and ‘Tiger Lake’ CPUs for laptops on time in 2019-2020. It also targets shipping its first discrete GPU for laptops and ‘Ponte Vecchio’ Xe GPU for data centers to diversify beyond CPUs. Any delays would damage Intel’s credibility and competitiveness.
Regaining Momentum in Desktop and Server Markets: Amid 10nm delays, AMD gained share in desktop and server CPUs using improved ‘Zen’ architectures. Intel’s immediate goal is to rebuild lost mindshare and market share using its 14nm ‘Comet Lake-S’ and ‘Ice Lake-SP’ product lineups through 2020 while preparing for the 7nm ‘Meteor Lake’ and ‘Granite Rapids’ generations.
Improving Manufacturing Agility and Cost Structure: Higher R&D costs from next-gen lithography challenges have squeezed Intel margins. Its goal is enhancing manufacturing flexibility through measures like third-party foundry usage and expanding use of internal fabs to better allocate capacity and control costs. Cost optimization is key for short-run profitability.
Long-Run Strategic Goals
Looking beyond the next few years, Intel’s long-run strategic goals are focused on strengthening leadership through innovation and expanding into new opportunities:
Leadership in Chip Architecture and Process Technologies: Intel’s primary long-run goal is to preserve leadership through ongoing architectural innovations and being at the forefront of next-gen lithographic nodes like 5nm and smaller. It aims to be the first to high volume manufacturing (HVM) at these advanced nodes.
CPU Performance and Efficiency Leadership: Intel focuses on increasing IPC via new CPU microarchitectures while also enhancing performance-per-watt. Goals are ensuring x86 CPUs remain best performing for multi-threaded workloads through the 2020s and beyond. Intel also targets leadership in specialized domains like artificial intelligence training.
Expansion into Adjacent Growth Markets: Intel recognizesthat established markets will eventually saturate. Its long-run goal is strong and early expansion into high-potential adjacent areas it foresees – such as autonomous vehicles, virtual reality, blockchain, and personalized medicine where semiconductors are increasingly critical.
Diversification Beyond CPUs: CPUs will likely remain Intel’s core competence. For the long-term the goal is a more balanced portfolio less reliant on any single product. This includes stronger focus on memory, FPGAs, network switches, discreet graphic chips etc. that leverage Intel’s manufacturing expertise.
Foundry Diversification: The long goal is greater optionality and flexibility through expanded foundry partnerships, especially for leading-edge nodes which require huge investments. Options could include making itself a generalized foundry service for early-stage designers or collaborating for chip production.
Globalization of Operations: Further internationalization would allow Intel proximity to key markets and supply diversification to mitigate risks. The long-run goal is a balanced global footprint through new manufacturing,assembly and packaging sites worldwide. Europe and Asia Pacific will receive increased attention.
Enhanced Corporate Culture and Talent Retention: Continuous innovation demands a culture of creativity, risk-taking and excellence. Intel also aims for an inclusive culture fitting a global talent pool and one able to better appeal to and retain a diverse workforce. This will be increasingly important in future.
Conclusion
Intel has clearly defined strategic goals to keep it ahead both in the short-run through ongoing product improvements and competitive responses, as well as long-term leadership through innovation, diversification, and globalization. Meeting these objectives requires immense investments and execution prowess. Intel’s resources and experience positions it well to remain a technology leader for decades to come if it can overcome nearer-term execution challenges and adjust strategy according to the dynamically changing industry landscape.
Andrew Stroud