Intel Sees Gains From Transformation, but Challenges Continue
In addition, the recent acquisition of Altera will help accelerate the company's capabilities in the data center, the CEO said. Intel last month closed its $16.7 billion acquisition of Altera, which makes field-programmable gate arrays (FPGAs).These are chips that can be reprogrammed for different workloads, some that will benefit both data center systems and IoT devices, Krzanich said. The first Xeon server chips with Altera FPGAs will start sampling with select customers later this quarter. The chips will feature server CPUs and FPGAs as separate modules, though the eventual goal is to house both on the same piece of silicon. Christa Macomber, an analyst with Technology Business Research, wrote in a research note that Intel's increasing focus on the high-performance computing (HPC) space is indicative of the company's agile data center efforts. "Intel continues to refine its [Data Center Group] strategy to align with customers' evolving data center needs," Macomber wrote. "This is critical to growth for Intel, as DCG is the vendor's second-largest business, and revenues from its largest business, the client computing group, [are in] decline. As markets such as cloud and virtualization mature, Intel is focusing on smaller but fast-growing markets, recently concentrating on HPC. HPC is now a widespread computing phenomenon, as customers seek to process and analyze growing data pools for their businesses advantage." Intel is addressing that demand with such solutions like Scalable System Framework (SSF) and Omni-Path Architecture "to bring HPC capabilities to a greater array of industries and workloads, including big data analytics," she wrote.There also were concerns about Intel's projections, which called for revenue in the current quarter to be about $14 billion and for revenue growth for all of 2016 to grow by mid- to high single percentages.
However, despite the success Intel has had in growing in new areas, the chip maker is still facing challenges that go beyond the PC market. Krzanich pointed to macroeconomic issues in places like China that are volatile and unpredictable and will impact Intel's business. In addition, financial analysts were concerned about the data center business, which in previous quarters had seen double-digit revenue growth, but in the fourth quarter the revenue increased only 5 percent.