Intel’s Chip Miracle Does No Help For Stock

As Intel expresses the advance, it is akin to the invention of a car that runs on water.

The most notable effect of the announcement is that Intel’s share only rose $.50 to $23.50. That is near a 52-week high, but Intel did release impressive earnings numbers recently and that triggered most of the recent increase in its stock price.

It could be that the market already expected a great advance in Intel’s chip architecture, but the advance is so mammoth that it seems unlikely.

Intel faces skepticism over whether more computing power is important to consumer electronics and handset companies. That, in turn, means that consumers are themselves not good targets for improved chips. The Tri-Gate products offer impressive computing power. They will also cause a reduction is the use of battery power. These factors combined should mean a change in the functions of PCs and portable devices.

Wall St. may believe that Intel has already been bested in the portable device and smartphone sectors by Arm Holdings (NASDAQ: AMRH), Qualcomm (NASDAQ: QCOM), and Texas Instruments (NYSE: TXN). The dominance of the three companies in their markets  could be hard to break. The features and functions of their products have also advanced considerably over the years.

Moore’s law may work with chips, but it may not work with consumers. PCs are already remarkably powerful. So, are smartphones. Many buyers of these products could find them more than adequate for daily use. The presence of new, revolutionary semiconductors may not matter to the end user at all.

Intel has made many a quantum leap in product features.  This may mean the improvement will be lost on the people it is meant to impress.

Douglas A. McIntyre