Running head: INNOVATION MANAGEMENT AND STRATEGIES IN INTEL 1

Report on Innovation Management and Strategies in Intel

Army Institute of Business Administration, Sylhet

Shah Md. Adil Hussain (10619006)

Md. Maksudul Karim Nur Shawon (10619007)

Md. Mostafizur Rahman Rumman (10619022)

Maisha Abedin (10619031)

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Abstract

Before a company formulates its technologically innovative strategy, they need to assess its

current position. what are their opportunities and threats, strengths and weaknesses, core

competencies and capabilities. This paper analyzes the Intel Corporation both inside out with

tools such as Porter’s Five Forces, and also explains their core competencies. The paper also

briefly explains the six pillars of the innovation strategy of Intel Corporation. Moreover, there is

also a discussion part in the paper that discusses the success of Intel in formulating its innovative

strategy and its effectiveness.

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Company Overview

Intel Inc Corporation is an American company that manufactures semiconductor

computer circuits. It was established in the year 1968 by Robert N. Noyce and Gordon E. Moore.

The Intel 4004, a 1/8-inch by 1/6-inch chip with 2,300 MOS transistors, was the first to be made.

With all the capability of the 3,000-cubic-foot ENIAC computer, this "computer on a chip" was

the world's first microprocessor ("Intel History — Silicon Valley Historical Association", 2022).

The 4004 was succeeded by the 8080 in 1980, which was chosen as the central processor

unit for IBM's first personal computer. Intel's next-generation Intel386TM microprocessor was

debuted in 1985, and the company's focus on R&D and manufacturing experience resulted in the

acclaimed Pentium CPU in 1993, whose successors still power performance-intensive

applications today. Intel's pioneering achievements have carried over into the twenty-first

century.

The business created the world's first completely functional static random-access memory

(SRAM) in January 2006 using 45 nm circuit technology. Intel is now creating more than 15

devices in its next generation of computer processors that use the latest 45nm processing

technology. Intel Core 2 chips next generation provide greater power management capabilities,

better performance, larger caches for mobile, desktop, enterprise computers, workstations, and

higher core speeds with more than 800 million transistors for quad-core and more than 400

million transistors for dual-core processors.

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Porter’s Five-Force Model on Intel

As a company’s innovation strategy depends on its current situation, we should first look

into Intel Inc Corporation’s situation when it created and updated its innovation strategy. Let us

begin with Porter’s Five-Force Model for Intel Inc Corporation (Team, 2022).

Competitive Rivalry

A decade ago, Intel barely had any competitors but now there are lots of players in the

market. They are continuously updating their products and innovating new products. Some

common competitors of Intel Corporation are AMD, Nvidia, and Samsung. However, the risk of

new entrants for Intel is minor except for the existing ones. Nevertheless, a high switching cost

will diminish the risk for Intel. That is because users cannot directly change the processor for

example. They will need other components to change as well. But still, the threat of new entry is

a moderate issue in the semiconductor industry environment, according to this component of

Intel Corporation's Five Forces Analysis.

The threat of Substitute

Now at present Intel still got most of the market share and provides better quality and

high-performance products to their customers. Moreover, there are few competitors with high

switching costs. That is why the threat of substitutes is moderate for Intel Corporation. On the

other hand, the semiconductor industry is experiencing a shortage, and Intel, the industry leader,

supplies the majority of the chips. As a result, even if customers wanted to convert to a different

product, it was not readily available. Some companies, however, sell chips that can accomplish

the same function. As a result, a company or a consumer can switch to a different product. The

threat of substitution is moderate in general.

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Bargaining Power of Intel’s Consumers

Simply, Intel got a high bargaining power over its consumers. That is because of the high

switching cost. In other words, if a consumer wants to switch from an Intel processor to other

substitutes, they need to change other components with it or sometimes the whole machine.

Furthermore, in the semiconductor industry, there are few competitors. So, consumers have few

options to choose from. Finally, there is no backward integration for the consumers. It is not

rational for consumers to choose the old version of semiconductor chips.

Bargaining Power of Intel’s Suppliers

The bargaining power of Intel’s suppliers is low because of several factors. First of all,

many suppliers provide the raw materials required for manufacturing chips. Secondly, Intel is a

dominating firm in its industry and orders raw materials in bulk, thus suppliers will not prefer to

lose contracts with Intel. Moreover, Intel got significant control on their supply chain whereas

Intel’s suppliers got little control over Intel because of that, suppliers got weak bargaining power

over Intel.

The threat of New Entrants

Chips for computers or semiconductors are produced by Intel. There is little risk of new

competitors entering this market. Due to years of research and development by numerous

companies, the design of computer chips has become increasingly sophisticated (both in terms of

hardware and software). As a result, it is difficult to enter the computer chip industry without the

required IP rights. However, there are some giants on the market that got enough resources and

ability to start manufacturing advanced processors that can significantly affect Intel’s market

share. An example of such companies could be Apple.

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Internal Analysis of Intel Corporation

Strengths

As Intel is still the largest chip manufacturer, Intel can be counted as a monopoly firm.

Moreover, they managed their journey so well by continuously updating and innovating their

products that they are still taking the advantage of first-mover in the industry. 

Again, they are in a position right now where they hold the majority of the market share with

strong brand loyalty, and to hold on to that they need to produce products in bulk. Thus, they buy

raw materials in huge quantities. That made it easier for them to continuously take benefit of

economies of scale (Ferguson, 2022).

Weaknesses

Intel is lagging in the mobile phone industry. Currently, the whole world is dependent of

smartphones. But the intel still does not have a product line for smartphones. This could be a

significant drawback for Intel. Moreover, they are currently earning the majority of their revenue

from a single product which is semiconductor chips. This is a risk for Intel because there are

competitors in the market which means the market growth for Intel is slow. If they somehow lose

their market share, it will be difficult for them to survive.

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Core Competence

Intel Corporation got the ability to develop an array of microprocessors in a short period

of time. They were able to diversify their architectures of micro conductors for different

computing types. Besides that, Intel dramatically improved its interconnection to work with

loads of data, artificial intelligence, and other heavy loads of data-centric tasks. These core

capabilities provide a significant competitive advantage due to their proven attributes of quality

and speed when compared to other competitors.

Innovation Strategy of Intel

Intel is significantly based on data and figuring out the best type of computer needed and

then deploying it in the market. Moreover, Intel created an environment where data flows

without any friction and with zero bottlenecks. They follow six pillars for innovation which in

end gives their customers access to advanced products with a better solution. The six pillars are

discussed below.

Innovation Leaders in Process and Packaging

Microprocessors are one of the most complex products that are manufactured by humans.

Intel Corporation uses Moore’s Law, which states that “the number of transistors on a microchip

double about every two years, though the cost of computers is halved”. They are doing so

because the data are increasing rapidly every day and a powerful chip can store, manage and

process those data efficiently.

Diverse Architectures with Unprecedented Choice

Artificial Intelligence holds a significant place to make our life easier by making complex

decisions. There are other corners such as the proliferation of data, edge computing, etc. that
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needs complex micro conductor chips and different types of computing. Intel is uniquely

positioned to deliver a diverse mix of scalar, vector, matrix, and spatial architectures deployed in

CPU, GPU, accelerator, and FPGA sockets. 

Scalar Architecture

Today’s workloads include a wide range of performance, from basic productivity apps to

advanced workloads like cryptography and artificial intelligence. Scalar-based CPUs – including

AMD EPYC™ and Intel Xeon Scalable processors – are optimized for these varying workload

types, offering consistent, predictable performance across a broad array of applications.

Vector Architecture

Vector architectures can deliver higher performance and double-digit performance/watt

improvements. That is because they provide much more efficient instruction-level parallelism

than scalar architectures. By scaling vector architectures from the client to the edge, Intel can

take parallel processing performance from gigaFLOPS to teraFLOPS, petaFLOPS, and

exaFLOPS.

Matrix Architecture

The matrix architecture derives its name from a common operation typically performed

for AI workloads (matrix multiplication). While other architectures can execute matrix multiply

code, ASICs have traditionally achieved the highest performance in implementing the type of

operations typically needed for AI inferencing and training. To simplify chip design, Intel has

developed an innovative architecture that enables high-performance execution without

compromising on space or power consumption.

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Spatial Architecture

Spatial architecture is a special architecture usually associated with an FPGA. Here, the

data flows through the chip, and the computing operation performed on the data element is based

on the physical location of the data in the device. This enables very fast calculations and makes

spatial architectures very effective. The specific data transformation algorithm that has been

programmed into the FPGA determines how this works.

Redefining the Memory and Storage Hierarchy

Intel redefines its products’ memory and storage hierarchy with data-centric

improvements and innovation for exponential advances. Intel invented an entirely new class of

nonvolatile memory. It delivers a unique combination of affordable large capacity and support

for data persistence, ideal for the in-memory databases associated with AI workloads and high-

performance computing these capabilities enable hundreds of times more data residency in

memory than even flash storage could provide.

Removing Roadblocks in Data Movement

Intel Corporation is investing more heavily than any other company in the industry to

interconnect their technology. In the current era, artificial intelligence, the internet of things, and

data-centric workloads are dominating the world. Thus Intel invests heavily in interconnection as

it is crucial to diminish bottlenecks and slow data flow.

Intel Security

The advancement in technology also brought the risk of security threats and a nightmare

for individuals to save their systems from those continuously evolving threats. Intel products are

designed, manufactured, and maintained using the industry’s best security practices.
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Their security capabilities are innovative and processes are robust and because of that

they easily mitigate the vulnerabilities and security challenges.

Exponential Innovation with Intel Through Software

Intel is making sure that its products reach the maximum potential and cross-architecture

solutions. Every product they manufacture contains multiple orders of magnitude performance

that can be enabled by software. Moreover, to magnify the effect of their software, they created a

common set of tools and open-sourced so that their developers get help from all around the

world.
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Discussion

In the early days, Microsoft collaborated with Intel and created high barriers to entry.

Microsoft still holds 90 percent of the market share but Intel lost a huge market share to AMD

and other competitors. But still, Intel holds the majority of the market share. Intel is best known

for their processors that work really fast and adapt magnificently in an office environment.

Recently in December 2019, Intel invested almost $2 billion to improve its Artificial

intelligence. However, Intel is mainly designed for programming and doing complex tasks. Thus,

they got drawbacks when it comes to Graphics Designing and Gaming.

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Recommendation for Intel Corporation

Intel is showing outstanding performance in its business cycle. They started their journey

so well that they are still taking benefits of first entering the market. They designed their

innovation strategy based on six pillars that they created. Those pillars magnified their

innovation and enabled them to create an array of processors fast. However, Intel got a drawback

when it comes to graphics. All the graphics designers and gamers are switching to Intel’s

competitor AMD because Radeon performs better in the graphics sector. Intel has better Single-

core performance while AMD has better multi-core threaded performance. AMD processors with

hyperthreading enabled significantly reduces the video rendering time and increase quality. Intel

processors don’t always come with hyperthreading enabled, so it’s a bit let down for them. This

is one of the reasons Intel is losing market share to AMD. If Intel Corporation wants to hold the

market share or gain the lost share then Intel should start manufacturing multi-core threaded

processors that can work better with graphics like or better than AMD.
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Conclusion

Although Intel Corporation has experienced ups and downs like other businesses, even during

the Global Crisis, it never gave up on Research and Development. Intel is successful and its

products are in high demand all over the world because it believes in reinvesting. Intel has

survived the legal challenges, patenting issues, and the Great Recession thanks to excellent risk

management measures.
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Reference

Ferguson, E. (2022). Intel Corporation’s SWOT Analysis & Recommendations - Panmore

Institute. Panmore Institute. Retrieved 17 July 2022, from http://panmore.com/intel-

corporation-swot-analysis-recommendations.

Intel History — Silicon Valley Historical Association. Silicon Valley Historical Association.

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%20practical%20and%20affordable.

Team, M. (2022). Intel Porter Five Forces Analysis | MBA Skool. MBA Skool. Retrieved 17 July

2022, from https://www.mbaskool.com/five-forces-analysis/companies/18297-

intel.html#:~:text=Intel%20Five%20Forces%20analysis%20helps,%2C%20financial

%20strength%20%26%20alternate%20solutions.