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Why Intel Is Going On The Offensive

Why Intel Is Going On The Offensive
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Susquehanna analyst Mehdi Hosseini said that although the continued penetration of SSDs into Enterprise app boded well for NAND, execution and a weakening mobile segment were challenges that minimized the earning upside for NAND manufacturers.

Hosseini commented that Intel Corporation (NASDAQ: INTC) [Rated: Neutral] seemed to have "gone on the offense" at this year's Developer Forum with discussions around "a new paradigm in storage." While XPoint was targeting the high-end computing segment, PCIe solution, along with lower cost 3D NAND, helped SSDs "further penetrate into Enterprise SSD."

Hosseini added, however, that some of Intel's targets appeared aggressive. For instance, Intel had indicated that PCIe would account for about 50 percent of the Data Center SSD.

XPoint was expected to be adopted soon. However, it was unclear how Micron Technology, Inc. (NASDAQ: MU) [Rated: Positive] and Intel would "compete for the same business since they will have their own branded products while collaborating on manufacturing," Hosseini said.

In the report Susquehanna noted, "On the CapEx side, we are of the opinion that end market demand needs to improve for Intel to spend more in CY16. Although some technology investment will certainly take place, the capacity part of the CapEx in CY16 will, in our view, hinge on end market demand (that ultimately impacts Intel's UR and GM)."

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