Intel – Financial Position Analysis

Products Intel designs and manufactures computing and communications components and platforms with improved overall performance and/or improved energy efficiency, offering products at various levels of integration. Components Microprocessors A microprocessor-the central processing unit (CPU) of a computer system-processes system data and controls other devices in the system, acting as the “brains” of the computer. Chipsets The chipset operates as the “nervous system” in a PC or other computing device, sending data between the microprocessor and input, display, and storage devices.

Motherboards Intel offers motherboard products designed for our desktop, workstation, and server platforms. A motherboard is the principal board within a system, and typically contains the CPU, chipset, memory, and other components. Wired and Wireless Connectivity Platforms Intel offers platforms that incorporate various components and technologies. A platform typically includes a microprocessor, chipset, and enabling software, and may include additional hardware, services, and support. Additional Product Offerings

NAND flash memory is a specialized type of memory component primarily used in memory cards, digital audio players, and system-level applications, such as solid-state drives used to store data and program code. Communications infrastructure products Network and server storage products. Products and Percentage of Revenue Revenue from sales of microprocessors for our major operating segments, presented as a percentage of our consolidated net revenue, was as follows (Dollars in Millions): Where:

Digital Enterprise Group: products that are incorporated into desktop and nettop computers, enterprise computing servers and workstations, a broad range of embedded applications, and other products that help make up the infrastructure for the Internet. Mobility Group: products including microprocessors and related chipsets designed for the notebook and netbook market segments, wireless connectivity products, and energy-efficient products designed for the MID and ultra-mobile PC market segments. Other Products: NAND Solutions Group, Digital Home Group, Digital Health Group:

Research and Development Intel investing in world-class technology development, particularly in the design and manufacture of integrated circuits. Research and development (R&D) expenditures in 2008 were $5. 7 billion ($5. 8 billion in fiscal year 2007 and $5. 9 billion in fiscal year 2006). R&D activities are directed toward developing the technology innovations that believed to deliver next generation of products and platforms, which will in turn enable new form factors and new usage models for businesses and consumers.

R&D activities range from design and development of products, to developing and refining manufacturing processes, to researching future technologies and products. Sales structure Intel sells products primarily to original equipment manufacturers (OEMs) and original design manufacturers (ODMs). ODMs provide design and/or manufacturing services to branded and unbranded private-label resellers. In addition, company sells products to other manufacturers, including makers of a wide range of industrial and communications equipment.

Company’s customers also include PC and network communications products users who buy PC components and other products through distributor, reseller, retail, and OEM channels throughout the world. Worldwide reseller sales channel consists of thousands of indirect customers who are systems builders that purchase Intel microprocessors and other products from distributors. In 2008, Hewlett-Packard Company accounted for 20% of net revenue (17% in 2007) and Dell Inc. accounted for 18% of our net revenue (18% in 2007). No other customer accounted for more than 10% of net revenue. Marketing

Corporate marketing objectives are to build a strong Intel corporate brand that connects with consumers, and have a limited set of product brands for advanced microprocessors and related technologies. Intel promote brand awareness and generate demand through own direct marketing as well as co-marketing programs. Direct marketing activities include television, print and web-based advertising, as well as press relations, consumer and trade events, and industry and consumer communications. Purchases by customers often allow them to participate in cooperative advertising and marketing programs such as the Intel Inside ‘ Program.

This program broadens the reach of brands beyond the scope of own direct advertising. Through the Intel Inside Program, certain customers are licensed to place Intel logos on computers containing microprocessors and processor technologies, and to use brands in marketing activities. Competition The semiconductor industry is dynamic, characterized by rapid advances in technology and frequent product introductions. As unit volumes of a product grow, production experience is accumulated and costs typically decrease, further competition develops, and prices decline.

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