Intel Changes Tune With Taiwan Partners, but Will That Be Enough?

NEW YORK (TheStreet) -- While the U.S. tech media were focused on Apple's (AAPL) Worldwide Developers Conference, Intel (INTC) president Renee James was in Taiwan trying to regain Intel's market momentum.

Intel has long had a China policy that told original equipment manufacturers they had to do business Intel's way, but James delivered a keynote address at the CompuTex trade show in Taiwan to demonstrate Intel can do business their way

That message was driven home at an Intel press briefing by OEMs such as Asus, which is using Intel chips in Android phones and tablets, as well as its new PCs

Intel's new "PC reference design," based on its 14 nanometer Broadwell chip, features a 12.5-inch display that is barely a quarter-inch thick, weighs less than 1.5 pounds, and uses a detachable keyboard with no cooling fan. James said 130 new Windows and Android tablets will be offered with Intel chips this year.

By way of comparison, the Microsoft (MSFT) Surface 3, which also uses an Intel chip, weighs a quarter pound more and features an 11.5 inch display

The new term for laptop is "convertible," in that the keyboard is detachable and the unit can also act as a tablet. The Surface 3 is a convertible. So is the new Intel reference design.

Since James became Intel president in May 2013, with Brian Krzanich as CEO, Intel stock has gained about 14% to its present level of $27.38. This was based on optimism that Intel had at last figured out the mobile market, which for years had been dominated by companies such as ARM Holdings (ARMH), Qualcomm (QCOM) and Broadcom (BRCM).

That optimism has yet to be reflected in results, however. Intel's net income for the quarter ended in March was $1.93 billion, less than the $2.045 billion it earned a year before. Earnings per share were flat year over year, at 40 cents. Revenue was up less than 1.5% year over year, at $12.76 billion. 

Intel has become a yield stock, with a 22 cent-per-share dividend currently yielding 3.3%, and requiring $1.1 billion in earnings to service each quarter. Intel shares peaked at nearly $80 in the year 2000, and were at $32 in early 2004.

A big part of Intel's failing in the last decade was that it lost the plot with Taiwanese OEMs, who wanted solutions they could build and sell, not "ecosystems" of hardware and software that required design and marketing.

The Asus Transformer Book that Asus Chairman Jonney Shih held this week at CompuTex is based closely on the new Intel design, dubbed Llama Mountain.

Intel's new approach faces a new threat from MediaTek, a Taiwanese company that owns no fabrication plants but whose smartphone chip designs seem to be driving Broadcom from that market

MediaTek is making its first Computex appearance this week. It was hosting a cocktail reception as this story was written, and CEO Tsai Ming-Kai will have his own keynote tomorrow, overnight New York time, where he will talk about touch-enabled hardware and the Internet of Things, markets Intel is also targeting, according to Focus on Taiwan

So although Intel has hot new products and new friends in Taiwan, it's only a competitor in a market it once dominated. The question for those looking at Intel for growth isn't whether it can compete in a Windows and Android world, but whether it can win in one dominated by Apple.

At the time of publication the author owned shares of AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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