Chances are that you are already familiar with the name but just in case someone is new to it, Intel is one of the world’s biggest technology companies. They produce semiconductor chips for computers and as far as revenue goes, they are one of the biggest providers. In this Intel SWOT analysis, we are going to try and understand why this company is so big.
Intel is an American company and is headquartered in Santa Clara, California. In 2020, they had the honor of being listed as the 45th company in the Fortune 500 list of companies for having the largest revenue amongst US-based corporations in 2020 from 2007 to 2016 fiscal years.
Other than the chips, they also provide microprocessors, motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors, and many other tech products related to computing.
The x86 series of microprocessors they make are the ones found in most PCs these days. They are providers of these processors to some of the biggest computer companies of the world such as Acer, Lenovo, HP, and Dell. You probably are reading this article on a computer with an Intel processor.
The company was started in 1968 by Gordon Moore and Robert Noyce. They both came up with the name by joining the words integrated and electronics to get Intel. It should be noted that the name is very appropriate for the company as Intel is also short for intelligence information.
So how did Intel become the company it is today? This is exactly what we will analyze in this article. A SWOT will identify the four main factors which govern the working of this business. Before we move ahead, it is important you understand the term more clearly.
The first two factors of the acronym i.e. strengths and weaknesses are basically called internal factors; these are the factors that are under the influential sphere of a company or any entity being considered for a SWOT analysis. This means that the company can control, mitigate and change these factors.
The other two factors; the threats and opportunities are called external factors as they cannot be influenced by the company and they arise on their own, affecting the company in different ways. This can be better understood using a suitable example.
The fact that Intel produces excellent products in terms of their quality is a strength for the company because quality assurance is directly in their control. So this would be an internal factor. Now suppose that their clients switch to other producers of processors because they like their offering more.
This is surely a threatening factor for Intel because they cannot possibly control their competitors and their product offerings. So here, an external factor is influencing the company.
Now that we have a better understanding of what SWOT is and how the factors are classified, we can move on ahead to the analysis.
Intel is a world-renowned brand for sure. This is made possible because of many strengths that the company can proudly boast. We cannot possibly discuss all of them in detail, but let’s look at the most important ones in this segment.
They have a very big chunk of the market share. If we talk about their sales of CPUs, the market share saw an increase to 30% from 23% during the end of 2021.
This was because of their Alder Lake launch during the year. Alder Lake is the name given by the company to their 12th generation of core processors.
This share they have from the market makes it possible for them to have huge influence and hence relevance despite their competitors.
Economies of Scale
They have a cost advantage as well because mass-producing their processors and other products serves them well as they are always in excessive demand.
They are able to enjoy great profits by minimizing their costs because of the amount they are able to sell into the industry. Even if there are competitors, the tech world is not running out of the need for Intel’s products like microprocessors and computer chips.
One way to have a significant hold of the market is to form strategic alliances with other similar or at least complementary businesses of the industry.
Intel has been able to do well in this regard. Wintel is their alliance with Microsoft (an amalgam of Intel and Windows) through which they sell computers with Intel x86 processors operating on Windows.
Intel has a list of very reliable suppliers who give them good quality raw materials to develop good quality products. They are very cautious of having only the best of the best to supply the materials.
They are known everywhere in almost every country around the world. They even got named as one of the world’s most valuable brands in 2020 by Forbes. Very impressive to say the least!
It is impossible to exist without any weaknesses, no matter how successful the company may be. Here are the biggest weaknesses that can be a problem for the brand if not taken care of in a timely fashion.
Because the main focus of the business was to make processors for PC computers, they were not able to penetrate the smartphone market which is a huge market to miss out on.
PCs are no longer in as much demand as they used to be in the past few decades because now smartphones have gained that importance.
At the moment, all of their major clients belong to the first world i.e. developed countries like the USA. They really don’t serve a lot of clients in developing nations which could be a weakness because it leaves room for others to take over.
Right now all of their product offerings focus on the computer industry mainly. Their portfolio does not have other types of businesses to help diversification.
When trends change and businesses start becoming redundant, companies rely on other investments to maintain their profitability. Intel should focus on meddling in other industries as well.
Opportunities can be very amazing because they can mitigate existing risks and they can actually increase the magnitude of strengths a company might have. They just have to be seized at the right time. Here are some of the opportunities available for Intel to focus on.
With the trend emerging for automatic vehicles, good processors are always in demand.
It would be a very interesting space for Intel to explore because the market is fairly new with a lot of room for growth and they have the resources and infrastructure to make it a very profitable segment for them.
Intel should look into tapping the segment for automatic vehicles as a means to diversify to mitigate the weakness discussed above.
They have a very big opportunity for expansion and growth by finding more clients and strategic partners in developing nations.
Once again, a current weakness can easily be made into an opportunity by employing effort and resources.
Being in tech, innovation is now second nature for them because of the exponential rate at which technology evolves. There are endless opportunities here for the company to explore.
There can never be a point where companies such as Intel could reach a saturation point with technological innovation.
These are the factors that need to be avoided at all costs because they have the potential to destroy businesses if not dealt with in a timely manner. Here are the threats Intel needs to be wary of.
The inevitable threat for every business, competition always keeps this brand on its feet. Some of the main competitors include Samsung, Qualcomm, NVidia and AMD.
AMD has in fact been giving them a very tough time. They provide excellent quality processors at a variety of price ranges including those much lower than Intel.
Having a good supplier network, on one hand, is an undeniable advantage, but it can also be dangerous because this way, suppliers have more control and higher bargaining power.
The prices of the raw materials could be changed by the suppliers. It isn’t easy to find backup suppliers because not everyone has the capability to provide the quality needed by a company like Intel.
The trend of keeping PCs at home is decreasing compared to older days. Nowadays families rely on smartphones, laptops and tablets for their internet and computing needs. PCs are just not as much needed.
Whereas laptops do feature their processors, the other gadgets don’t really feature Intel. They need to come up with alternative strategies so that if PCs become obsolete in the future, Intel doesn’t follow that path.
If you have made your way all the way down over here, you have now understood the company in greater detail. So now you can justify why Intel is as big as it is using a business tool i.e. SWOT.
To summarise it all, we have analyzed the brand in light of the four factors of SWOT. It can easily be seen based on this information that they have a good amount of strengths under their belt.
Some of the weaknesses that exist can easily be mitigated by converting them into opportunities as identified in the article. The threats though should be taken seriously so as to avoid any big damages which would require exhaustion of resources to get rid of.
Overall it is safe to say that Intel is in the game for the long run and isn’t going away anytime soon.
A SWOT analysis is one of the easiest to understand, use and implement frameworks available for improving your organization. It can be applied to industries at large as well to understand them in more depth.
It highlights the strengths and weaknesses which occur on the inside and the threats and opportunities which linger outside.
If you know these four components of the SWOT, you very easily can be on the road to improvement and growth. Knowing how to conduct a SWOT analysis is a very useful skill to have for working professionals as well as students to have.
If you wish to work on a SWOT of your own to increase your knowledge, we recommend the use of a good template. Moreover, you can understand how the analysis works by taking a look at a few extra examples.
The easiest way to understand and explain a SWOT analysis visually is to draft it in a tabular form. It is more concise, clean, and comprehendible like this.