Intel's Lack Of China Exposure Is Now Good, Right?

• Intel Corporation INTC shares are down 21 percent year-to-date, and have been trading below the $30 mark since the first week of July.
• Semiconductor Advisors’ Robert Maire believes that the stock is a defensive play against the backdrop of a deteriorating Chinese environment.
• Intel's limited exposure to handsets and China has become a positive, the company’s strength in cloud and servers is not impacted by the consumer pullback on spending and Crosspoint has huge upside.

For a long while now, Intel has been criticized for its limited exposure to and success in the handset market.

“Analysts, ourselves included, have been negative on the company as it has missed much of the upside in China and other developing markets where handsets and tablets are the consumers device of choice for accessing the internet and being connected,” analyst Robert Maire wrote.

All of a sudden, exposure to these markets appears to be a negative. This is because consumers, especially the ones in those markets, are making a sharp cutback on their spending, resulting in a decline in handsets sales.

“In a perverse turn, Intel now looks good because it doesn't have much to lose in those markets as compared to many others who rode the rocket up but can't eject as it returns to earth,” Maire added.

The analyst does not expect as much weakness in the server market, which actually exhibits continued upside, in view of the new processors being rolled out with better power and performance specs.

“While consumer spending, especially in developing markets is more fickle, and obviously more negative near term, business spending on servers should be more steady. Again this is a net positive for Intel,” Maire explained.

The analyst believes that Crosspoint has significant potential to create and accelerate new applications in all areas of computing - from handsets to servers. Its impact can be more than that of NAND. “We will likely see many new data driven applications as well as substituting Crosspoint for existing NAND applications assuming we can hit the price point, which we think is doable.”

Maire said that Intel’s stock is “at an attractive point,” following an extended period of price declines. Investors taking their money out of companies that have exposure to China, handsets, tablets and developing markets may invest in Intel.

“With strength in the cloud, large upside in new technologies, Intel is suddenly looking much more attractive (especially as the others look much uglier...). We would likely be buyers here as we see less downside and longer term upside,” Maire added.