Paul Sakuma/Associated Press
Updated: Oct. 13, 2010
The Intel Corporation is the leading maker of semiconductor chips and is known for its quest to make computer chips ever smaller, faster and cheaper. It also makes circuit boards and other semiconductor products, which are the building blocks of computers, servers, consumer electronics and communications devices.
Intel supplies about 80 percent of the PC microprocessor chips worldwide.
From 2008 to 2010, the dominant companies in the PC industry faced a constant stream of disappointment as their largest corporate customers put off replacing computers. A generation of faster chips, new software and bigger hard drives came and went with disappointing sales, as the big corporate buyers gave up on their tradition of replacing two-year-old machines.
Intel's fortunes underwent a profound shift during the period. The company was one of the first to feel the brunt of the recession and a global clampdown on technology spending. As a result, its sales plummeted at record rates. But it was also one of the first technology companies to benefit from renewed consumer interest in computers, specifically laptops, and its results in 2010 reflected this enthusiasm for new machines.
Intel reported record sales during the second quarter of 2010, and predicted that sales in its third quarter would end up far better than expected, as large companies had finally started to buy new PCs. Revenue for the quarter were 34 percent above the second quarter of 2009.
In an effort to expand beyond its core chip-making business, Intel said in August 2010 that it had agreed to buy McAfee, the computer antivirus software maker, for about $7.7 billion in cash. With its McAfee purchase, Intel is gaining an entrance into the security tech sector, one that is expected to continue growing quickly.
Intel is also pushing hard in the highly competitive race to put chips in smartphones and televisions and other consumer devices that are gaining computer power. In October 2010 it reported a flurry of sales of the company’s chips in TV and set-top boxes, figures that seemed to bode well for Intel’s consumer aspirations. The company sold one million chips aimed at smart TVs last quarter, and its only prominent loss was getting shut out of Apple TV.
Headquartered in Santa Clara, Calif., Intel was founded in 1968 by two giants of the early semiconductor industry, Gordon E. Moore and Robert N. Noyce, two of the founders of Fairchild Semiconductor. The company was initially financed with a $2.5 million investment arranged by a renowned Silicon Valley venture capital investor, Arthur Rock, who later helped finance Apple Computer.
Intel got its big break in 1981 when International Business Machines, then known for manufacturing mainframe computers and other office machinery, selected Intel to provide it with the processor for its first personal computer, the I.B.M. PC. Within a few years, Intel had become one of largest corporations in the United States and one of the most recognizable brands in the world.
In 2009, Intel was hit with an antitrust action by the European Union. Its first-quarter revenues for the year fell 26 percent to $7.1 billion and profit fell 55 percent.
In December 2009 the Federal Trade Commission sued Intel, accusing it of using its dominant market position "to stifle competition and strengthen its monopoly." The filing went beyond charges in cases brought by European regulators and the New York state attorney general in focusing on video graphics chips and software in addition to Intel's core market, the microprocessors that sit at the heart of personal computers.
The F.T.C. move also came a month after Intel reached a sweeping $1.25 billion settlement with its longtime rival in the chip market, Advanced Micro Devices. That settlement, covering both private antitrust and patent claims, was seen as possibly deterring the F.T.C. from moving ahead. In its long-running legal fight with Intel, A.M.D. was both the leading victim of the giant chip maker and its chief investigator, generating most of the evidence that was then used by government regulators around the world.
Intel has long been held up as the gold standard when it comes to ultra-efficient, advanced chip manufacturing plants. The company is the last mainstream chip maker to both design and build its own products, which go into the vast majority of the PCs and servers sold each year.
But with mobile technology, an expensive race is on to build smaller chips that consume less power, run faster and cost less than products made at older factories.
Intel has unsuccessfully tried to carve out a prominent stake in the market for chips used in smaller computing devices like smartphones. But the company says one of its newer chips, Atom, will solve this riddle and help it compete against the likes of Texas Instruments and Qualcomm.
In the last few years, Intel's investment in Linux, the main rival to Windows, has increased. Intel has worked on developing a Linux-based operating system called Moblin as well. The company has aimed the software at netbooks and smartphones in a bid to spur demand for the Atom mobile device chip.
To make Atom a success, Intel plans to use software for leverage. Its needs Moblin because most of the cellphone software available today runs on chips whose architecture differ from Atom's. To make Atom worthwhile for phone makers, there must be a supply of good software that runs on it.
The company's push into selling chips that are embedded in things other than computers -- televisions as well as phones -- has brought with it an unfamiliar atmosphere of anonymity, as it foregoes the "Intel Inside'' stickers it worked so hard to make ubiquitous on laptop's and desktops.
Intel continues to face investor doubts about its long-term prospects. Executives at Intel have maintained that the PC industry has plenty of life left as a growth market, especially as developing countries begin buying large quantities of computers. Investors, however, have yet to buy into this vision.
