Will Intel Profit From the Internet of Things?

As the world's largest semiconductor producer, tech giant Intel (NASDAQ: INTC) has a vested interest in tapping into the Internet of Things (IoT), particularly given the tepid growth outlook for some of its major revenue drivers. Although predictions of the potential financial opportunity in the IoT can get ridiculous rather quickly, let's explore Intel's plans to benefit in this growing area.

Intel's IoT segment designs and produces chips for a host of communications uses, including retail, transportation, industrial, video, real estate, and smart-city applications. It's also been Intel's fastest-growing segment in terms of revenue over the past two fiscal years. The IoT business increased sales 16% in 2016 and 9% in 2015.

However, Intel generates only a small amount of its total revenue from the IoT. In fact, the company's client computing group (CCG), which makes chips for PCs, and its data-center group, which produces data-center semis, accounted for $50.1 billion, or 85%, of Intel's $59.3 billion in fiscal 2016 sales. By contrast, Intel's IoT group produced $2.6 billion, or 4% of the semiconductor behemoth's total sales last year. But Intel expects CCG sales to continue to decline a bit in the coming years, and it believes growth from segments such as the IoT will help counteract those declines. The company expects its IoT total addressable market to grow to around $30 billion in potential sales by 2021 -- and that only scratches the surface of Intel's additional growth opportunities.     

Continue reading

Source: Fool.com