Intel Is A Great American Story — Here’s Why

President Obama visits Intel factory

The White House

This post originally appeared at Golden Technologies.After President Obama shared with us his plan to overhaul the greater economy, he’ll visit one industry where American ingenuity and good old-fashioned competition do rein: the land of microprocessors.

This morning, after his State of the Union address last night, President Obama will receive a tour of Intel’s new $5.2 billion manufacturing facility in Chandler, Arizona. The currently under-construction plant sends a strong message to the American people: Companies can continue to remain competitive without outsourcing all their manufacturing. And competitive is an understatement.

After Apple made the jump from the AIM (Apple-IBM-Motorola) PowerPC chips to rival Intel, the market for computer processors looked less and less robust. But, in the last 5 years things have changed drastically. While Intel has maintained a substantial lead over once sole competitor AMD, they now face challenges due to the rapidly evolving need for processing power in mobile browsing. With Apple iOS and competing Google Android devices opting to use low-power ARM chips, the stranglehold on computer processing that Intel has had for so many years has been weakened. Despite this challenge, Intel reported late last week a record year in 2011 and a strong strategy for FY2012.

Sea Change and New Strategies
That strategy was set in motion by a shuffling of personnel that has many speculating about the heir apparent to Intel’s CEO position. Vaulted up to COO status, Brian Krzanich, is following the Intel standard model of upward mobility. Current CEO Paul Otellini and his predecessor both made their final step from the COO position.

Another potential candidate with CEO potential made big news too. Intel’s CFO Stacy Smith announced Intel’s FY2012 intent to raise capital spending by 16% and R&D by 21%. As they have in the past, these increased business investments by Intel will likely lead to near-quantum leaps in microprocessor development. Intel has already announced plans to showcase their Ivy Bridge processor, with will be showcased in some new products in April of this year. 

The Ivy Bridge features their 22nanometer(nm) technology, versus Apple’s A5 (produced by Samsung), a 45nm chip used in the iPhone 4S and iPad2. Boasting  smaller size and lower unit costs, the Ivy Bridge illustrates Intel’s ability to quickly regain footing at a cost that is highly competitive in the market and with a product that leads the pack. Several other Intel innovations will also be rolling out into the market in 2012.

Intel’s not-so-secret plan to join forces with Motorola and produce a new Android-based phone was unveiled by CEO Paul Otellini at this year’s Consumer Electronics Show (CES).  A bit more surprising, though, the companies plan to release the new phone this year, which catapulted Intel back into the conversation. The companies are keeping the full specs under wraps. But, what is known is that it will be powered by Intel’s dual-core Atom chip (a 32nm chip) which has boasted speeds of 2.13GHz or more. Intel said to expect the phone in the 2nd half of this year.

And apparently partnerships is the name of the game this year as Intel joins forces with Lenovo to unveil yet another exciting new mobile product at CES. Lenovo’s K800 makes use of Intel’s dual-core Atom processor. The new flagship Lenovo phone will don some pretty impressive technical specs; processing speeds at 1.6GHz, 1Gb of Ram, a 4.5 inch 720p display, and an impressive camera with video features to par. Intel’s chip allows Lenovo to push graphics technology a few big steps forward for mobile users.

Intel’s ability to mass-produce its own architectures gives the company substantial leverage over their competitors and smaller, independent producers who are often dependent on third-party production or third-party architecture. Their ingenuity in creating lower-powered chips will provide users with batteries that don’t die when it’s time to make the evening commute, but enough horsepower to do some intense 3D gaming all the way home. Additionally, Intel’s power brings graphic capabilities closer to the front-line of technology and makes multi-tasking on mobile devices more seamless.

Nuclear Threat Potential
It sounds like Intel has a foothold on the desktop market with its popular and increasingly fast x86 processors. At the same time, they’re making up real ground in the battle over slower, less power-intensive mobile chips. But, in the world of computer processors partnerships and a “what have you done for me lately?” attitude rein king.

It was Intel’s brilliant one-step-ahead approach that won over the folks in Cupertino. Apple’s subsequent decision to switch over to Intel marked a real sea change in the power struggle–think of the fall of the Soviet Union. Since that move, Apple’s focus has clearly been in mobile platforms and their hugely popular development of iOS.

Well, behind the scenes in Cupertino there are some interesting trends arising. In 2008, Apple snatched up ARM chipmaker P.A. Semi (just $300 million). Next, they spent just over $100 million to nap experts at ARM core design “Intrinsity.” And just three years back, Apple quietly poached a few former CTO’s from AMD.

rumours and conspiracy theories have been whirling about. The most accepted among them? That Apple will be building their own ARM processors to replace Intel in Macbooks and soon desktops. The future appears pretty clear for Apple, but its too soon to call anything concrete.

That move will surely mark the next step in the evolution of microprocessing competition. If Apple’s switch to Intel meant the fall of the Soviet Union, the switch away from Intel means the rise of Japan and China.

As technological advancements exponentially each year, the market can rest assured that Intel will continue to maintain their strong position- to both benefit the producers of technology, who are able to enter markets at a lower cost, and the consumers, who are able to afford the latest and greatest technological advancements.

At the end of the day, Intel is a great American manufacturing story–one deserving of a Presidential “atta-boy.” It might be one of only a few remaining stories of its kind and, if all goes well with mobile computing, it might also be the beginning of a new trend toward insourcing. But beyond Intel, the whole story of microprocessing remains an American one, and as Apple, Intel, AMD and ARM battle it out over the coming years we all win.