REPORT INTRODUCTION TO MICRO ECONOMICS SEM i (2020 2021) topic MONOPOLY IN UNITED STATES

INTERNATIONAL UNIVERSITY-HCMUNIVERSITY BUSINESS ADMINISTRATION DEPARTMENT REPORT INTRODUCTION TO MICRO ECONOMICS SEM I (2020-2021) Topic: MONOPOLY IN UNITED STATES LÊ MINH HÀO BABAIU20550 MAI ĐÀO UYÊN PHƯƠNG BABAIU20521 LÊ BẢO TRÂM BABAIU20262 HUỲNH NGỌC THẢO VY BABAIU20185 I History begin Intel Corporation was founded on July 18, 1968, at that time an integrated corporation in electronics, manufactured in Santa Clara, California, USA by chemist and physicist Gordon E Moore and Robert Noyce, after they left the company Fairchild Semiconductor Gordon Moore (1929) and Robert Noyce (1927-1990) are the two founders of Intel Corporation Noyce is the general manager and Moore is the director of the research and development department of the semiconductor component maker Fairchild Semiconductor But Fairchild Semiconductor is under the control of Fairchild Camera & Instrument Corporation The two men, along with his assistant, Andrew Grove, disagreed with the group's management, so decided to leave Fairchild Semiconductor to set up their own company in 1968 Both of them before coming to contribute to the establishment of the company founding Fairchild Semiconductor also co-founded the semiconductor company Shockley Semiconductor Therefore, the two men are very confident that they can continue to build another company Each contributed $ 250,000 and called for an additional $ 2.5 million in investment to form a company called NM Electronics At first, the two men planned to name their company "Moore Noyce" (their names) However, this name sounds the same as "more noise" For an electronics company, this name is actually not good Then, the two decided to take the initials of from Integrated Electronics (integrated electronics) to become from Intel But the name is owned - it's the name of a hotel group Therefore, the two men had to buy back the copyright of the name at the end of 1968 Since then, the name Intel began to appear Instead of making transistor-shaped bulbs to compete with the old company, Intel worked on making electronic chips for computers In 1971, Intel was successful in selling chips That same year, Intel scientists developed a new chip called the microprocessor (microprocessor) with programmable capabilities for computation Since then, the microprocessor has become the "brain" of the computer Intel microprocessors have become smaller, faster, and cheaper over the past three decades and dominate the world market Officially launched in 1971, the 4004 microprocessor chip became a premise, allowing equipment manufacturers to produce smarter PCs, elevators, digital cameras, dialers, and cell phones It also helped bring Intel, then a three-year-old microprocessor maker, into major corporations around the world II Expanding around the world In the 1970s, Intel products such as random access memory (DRAM, SRAM) and read-only memory (ROM) dominated the world market The first microprocessor that Intel hit the world market on November 15, 1971 was the Intel 4004 microprocessor, although at that time Intel's main activity was not to manufacture microprocessors It wasn't until the mid1980s that Intel started to focus on microprocessors In 1972, Intel began expanding production outside the US with a factory built in Penang, Malaysia In 1974, Intel launched the Intel 8080 microprocessor, according to many people this is actually a multi-purpose processor, it can replace 4,500 transistors and the speed is 10 times faster than the "elder" of the IT After that, Intel 8080 appeared in many electronic products such as traffic lights, cash registers In 1975, the Intel 8080 microprocessor was first used in a personal computer called the Altair 8800, attracting thousands of buyers III Recent development In 2004, Intel invested over $ 4.8 billion in research and development Intel's recent activities have focused on promoting and developing the use of wireless networking technology Recently, the company released a series of new computer processors based on Intel XScale® technology designed to connect to broadband communications networks in high-end PDAs and mobile phones These processors are designed to meet the requirements of portable portable devices: multimedia, multimedia, security, low power consumption while still pushing enough computing power to provide Take pictures, record movies, play back video with image quality like a real DVD player Intel recently announced the arrival of the first WiMAX product to provide carriers and carriers with devices capable of distributing next-generation wireless broadband networks worldwide gender WiMAX (which stands for Worldwide Interoperability for Microwave Access) is a standard wireless technology that provides high-speed, end-to-end broadband connectivity for home, corporate and wireless mobile networks This is a high speed and low cost technology The first application of WiMAX technology allows to bring broadband Internet technology to remote places where there is no cable or ADSL at present As a standard technology, WiMAX is expected to bring convenience and economic efficiency to wireless Internet users More recently, Intel tried again on the UK market by introducing WiMAX technology into science museums in Wroughton It is a large 545 acres dedicated to the collection of large objects in 11 old aircraft WiMAX allows museum curators in different places to communicate with each other quickly so that information and data about the museum antiques can be updated Today, 90% of computers worldwide use Intel chips Currently, Intel has a total of more than 90,000 employees worldwide with 15 production facilities globally, including facilities in the US and overseas facilities (in China, Costa Rica, Ireland, Israel, Malaysia and the Philippines) Revenue of Intel in 2005 is estimated at over 38 billion USD Intel's manufacturing facilities fall into two categories: the fabrication facility (fab) and the assembly and test facility Manufacturing facilities for making silicon, chips, and memory components After the products are manufactured in the manufacturing facilities it will be sent to the assembly facilities for microprocessor integration and commissioning Due to the high requirements of making chips (using a variety of chemicals, state-of-the-art equipment, high level of expertise) fab fab have much higher construction investment than assembly facilities On average, one fab has an investment of about $ billion IV Achievements Intel was founded in 1968, with only 12 employees and operates in a rental building on a quiet corner of California with revenues of $ 2,672 / year Today, the company has 80,000 employees with assets of nearly 175 billion USD In the first quarter of 2005, Intel reported profits of $ 2.2 billion - a 25% increase over the same period in 2003 Intel's leading position can be attributed to a series of scientific breakthroughs and continuous development over time The first opportunity came in 1971 with the 4004 microprocessor when it was approached by Japanese computer manufacturers Ten years later, IBM chose the company's 8088 computer processor for use in its first line of PCs In 1993, Intel introduced the first Pentium® computer processor to the market Since then, almost every year the company has continued to launch its own new products - a strategy not seen in any other company Intel founder Gordon Moore once said, 'If automobile technology were to evolve as fast as semiconductor technology, a Rolls-Royce could run 500 thousand miles with only a gallon of fuel and it was so cheap that it could cost a lot of money Buying a new Rolls-Royce is less than depositing it in the yard ' Intel® Centrino ™ mobile technology is a big new achievement for Intel in bringing wireless networking technology to the public Today, Intel is one of the pioneers in the Wi-Fi revolution - Organization structure - Business strategy At the beginning, only operating in the US, Intel implemented an international business strategy, standardized production and export Then expanding globally, a global strategy to the present day (because of product specificity) In 2009, Intel formed a strategic alliance with Nokia According to Intel, the deal is part of its strategy of growing beyond the traditional PC and server markets and towards mobile devices and other systems Alcatel and America's largest chip maker have just announced an alliance to promote the WiMAX (or 802.16) standard - a broadband standard designed to compete with GSM and future UMTS mobile protocols It is assumed that the technology will compete with ADSL, cable, and UMTS (Universal Mobile Telecommunications Systems) or third-generation telephony standards (2004) V Marketing Product strategy + Product Intel is a special, unique and most important business that is holding and always at the forefront of the most valuable product in the world of the digital age, a product that is considered the "brain" side in a computer, is the power behind every popular digital device and service today Intel products are highly standardized to satisfy the needs of customers around the world Intel has invested billions of dollars to make more processors in a day than competitors can make in a year As a result, Intel products are in more than half of the products on the list of the world's fastest supercomputers (According to the list of the 500 fastest supercomputer systems in the world) Intel's supercomputing platforms are pivotal in a number of research areas, from improving space exploration safety to forecasting climate conditions across the world "More mainstream" industries such as financial services and healthcare are also using systems that use Intel products to achieve faster and more accurate results In addition, Intel also has a build to order program for notebooks in many countries to meet the growing demand for notebooks When the customer requests to change the processing speed, memory capacity, storage capacity, wireless network card of the machine, it will be met in any country in the world thanks to standardized machine components Therefore, Intel is committed to supporting the worldwide warranty system + Trademarks Intel's branding approach shows how close a B2B (Business to business) product manufacturer can reach an end customer Intel has demonstrated that through a process of awakening customer recognition, an electronic component still has a very important voice Combined with new branding approaches such as: collaborative marketing, fostering tied relationships, developing global initiatives for the common good, Intel can build a new dimension beyond what a microprocessor can bring to human life According to a 2005 report by Interbrand / BusinessWeek, a B2B brand valuation research program, Intel is one of the top most economically valuable brands among B2B businesses The value of the Intel brand is 35.6 billion USD, accounting for a very large proportion of the total assets of this corporation Intel's own brands are estimated to contribute about $ billion annually to Intel's market value It is the brand, not the product, that sets the economic value and differentiates Intel from its competitors Intel multinational corporation has demonstrated its value in front of customers, giving customers exactly what they want A strong brand name and a well-positioned strategy have effectively influenced customers' buying decisions now and in the future Distribution Currently, Intel products are supplied to main customers, nearly 80% for original material manufacturers and over 20% for distribution channels Intel resellers are currently present in 165 countries with 225,000 members, including 255 wholesale distributors, 1,100 warehouses Intel dealer systems currently account for between 20% and 30% of Intel's total processor sales It is the distribution channel system that helps to spread Intel products to every corner of the global market Therefore, the development of indigenous distribution systems, especially in the Asian market, has been focused on over the past 10 years by Intel VI What is a monopoly A firm is a monopoly if it is the sole seller of its product and if its product does not have close substitutes A monopoly arises when: A single firm owns a key resource; The government gives a firm the exclusive right to produce a good; A single firm can supply the entire market at a lower cost than many firms could The fundamental cause of monopoly is barriers to entry A monopoly remains the only seller in its market because other firms cannot enter the market and compete with it Barriers to entry, in turn, have various sources, include: Monopoly resources Government regulation: The government gives a single firm the exclusive right to produce some good or service The production process: A single firm can produce output at a lower cost than can a larger number of producers Let’s briefly analyze Intel business; then, find out how it gained monopoly power VII Intel Business Analysis According to Bloomberg, Intel’s microprocessors are used in over 80% of global PCs sold each year, and the company has nearly 100% of the market for servers that are built on PC chips How has Intel amassed such a dominant share in these huge markets? Simply put, Intel has consistently invested to maintain the most advanced manufacturing process in the world, enabling it to deliver the best performance and value proposition to customers Developing and manufacturing microprocessors is extremely complex and capital intensive The manufacturing process requires hundreds of steps in “cleanrooms,” which, according to Intel, contain air which is 1,000 times cleaner than a hospital’s operation theater Building a single plant costs roughly $5 billion today and will only increase in cost going forward Research and development costs are also astronomical in the semiconductor manufacturing industry Intel spent more than $12 billion on R&D in 2015, representing about 22% of its total sales To maintain its technological lead, Intel must constantly invest in cutting-edge processes to improve the performance and value of its chips Intel expects capital spending to total $10 billion in 2016, and Intel has spent more than $160 billion on R&D and capital expenditures since 2005 Not surprisingly, there are very high barriers to entry in this industry The cost of developing valuable intellectual property and building out competitive production facilities is enormous, especially when the bulk of customers are already dependent on Intel’s chips Intel’s investments have allowed it to consistently introduce the next generation of process technology every two to three years, improving the performance of its chips at a breakneck pace that competitors cannot afford to keep up with Intel is also one of the few semiconductor companies that manufacture products using their own facilities (most semiconductor businesses design their chips and outsource manufacturing to save costs and generate more predictable cash flow) As a result of its scale and vertical integration, Intel exerts more control over its performance optimization and can introduce new products to the market at a faster pace With costs to build leading-edge manufacturing facilities rising (it becomes increasingly difficult to build smaller chips), fewer companies are able to compete with Intel’s advancements in performance, energy efficiency, and cost In addition to spending on manufacturing plants and R&D, competitors and new entrants must contend with the strong reputation of Intel’s brand, which recently ranked as the world’s 14th most valuable brand Altogether, Intel’s economies of scale, leading technology portfolio, and cutting-edge manufacturing processes have created a powerful ecosystem with high switching costs for customers Intel’s architecture has been refined for decades, and the company has funneled well over $100 billion dollars to continue improving it As the incumbent technology in PCs and data centers, Intel’s processors have effectively locked up customers For example, when Dell develops a new computer, there is no compelling incentive to switch to a different processor family as long as the previous version worked and the next one offered by Intel is even better Many legacy applications run on Intel’s technology, and switching would be costly Intel’s leading PC technologies have also provided the foundation for the company’s expansion into the data center and “Internet of Things” markets Intel’s PC business provides incredible scale with about $35 billion of revenue and possesses substantial intellectual property that translates over into other electronics such as servers This gives Intel an advantage once again over smaller players with inferior manufacturing processes However, it doesn’t guarantee Intel’s success in dominating these markets either One move Intel recently made to continue strengthening its position in data centers and Internet of Things devices was its acquisition of Altera (ALTR) for $16.7 billion in 2015 This deal helped Intel gain exposure to field-programmable gate arrays (FGPAs), a more flexible type of semiconductor chip that could account for as much as a third of the processors in all data centers by 2020 By purchasing Altera, Intel can stay in front of this potential development and deliver customizable, integrated products (Intel Corporation: A Technology Monopoly Paying Safe, Growing Dividends (INTC), 2021) VIII How Intel gained monopoly power in the market for PC chips Legal Barriers As Intel entered the semiconductor chip manufacturing industry; the founders and executive board were filled with ideas as to how they could become the best in their market With their innovative ideas, Intel decided to receive patents on their products to make their technology and ideas untouchable to other competing companies This allowed Intel to have an exclusive right over their memory chips and semiconductors making it difficult for other companies to compete as well as giving Intel significant monopoly profit There are not many companies that have patents that interfere with the ideas put forth by Intel in an attempt to be patented for their own brand Although Intel had many patents, they were faced with many lawsuits from their main competitor AMD Advanced Micro Devices, as it was to believe that their patents had infringed on some of their ideas This led to Intel and AMD coming to a cross-licensing agreement in 1976 allowing both companies to use the others technological innovations without charge Economies of scale Intel started off as a very small company with patents on its new technological ideas for semiconductors and processors In 1971, Intel created its first microprocessor chip which later became its primary business idea as a result of PC’s success During the 1990’s Intel was aggressive in their innovation towards the chips and became the dominant supplier of all PC computers Intel and PC had a ten-year deal in place to ensure the brand name of Intel would grow being PC’s number one supplier As a result of this partnership (which is still going on), Apple decided that they would need the new x86 processor from Intel to power all their Macintosh computers This relationship between Apple and PC with Intel made it very difficult for other companies with new ideas to enter the industry as Intel supplied the largest computer manufacturers with semiconductor chips As well, the production of these chips are a very expensive task and new companies with low budgets have a tough time competing in the market with Intel and other mid to large sized companies Pricing and strategic barriers Intel has very unique price and strategic barriers when it comes to the way they are able to “create” barriers to ensure they stay a monopolistic company Intel has been in constant lawsuits with many companies about their patent infringement on their computer architecture and other technologies In an attempt to save the business, Intel sued the companies back for using their patented ideas Both companies would drop the lawsuits and Intel was given the right to use the current and future patented idea As well, they would arrange agreements with competing companies to allow a crosslicensing to ensure both companies would profit from the innovative idea Intel has been able to keep their relationship with PC and Apple to maintain their monopoly power Even though they have been sued by many rival companies; Intel has branded their name into being a household company for computer chips (Power, Power and profile, 2021) IX Policies implemented by United States to control monopoly – THE ANTITRUST LAWS 10 Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." In 1914, Congress passed two additional antitrust laws: The Federal Trade Commission Act, which created the FTC, and the Clayton Act With some revisions, these are the three core federal antitrust laws still in effect today The antitrust laws prescribe unlawful mergers and business practices in general terms, leaving courts to decide which ones are illegal based on the facts of each case Courts have applied the antitrust laws to changing markets, from a time of horse and buggies to the present digital age Yet for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up Here is an overview of the three core federal antitrust laws The Sherman Antitrust Act The Sherman Antitrust Act of 1890 was the first measure passed by the U.S Congress to prohibit trusts It was named for Senator John Sherman of Ohio, who was a chairman of the Senate finance committee and the Secretary of the Treasury under President Hayes Several states had passed similar laws, but they were limited to intrastate businesses The Sherman Antitrust Act was based on the constitutional power of Congress to regulate interstate commerce (For more background, see previous milestone documents: The Constitution, Gibbons v Ogden, and the Interstate Commerce Act.) The Sherman Antitrust Act passed the Senate by a vote of 51–1 on April 8, 1890, and the House by a unanimous vote of 242–0 on June 20, 1890 President Benjamin Harrison signed the bill into law on July 2, 1890 A trust was an arrangement by which stockholders in several companies transferred their shares to a single set of trustees In exchange, the stockholders received a certificate entitling them to a specified share of the consolidated earnings of the jointly managed companies The trusts came to dominate a number of major industries, destroying competition For example, on January 2, 1882, the Standard Oil Trust was formed Attorney Samuel Dodd of Standard Oil first had the idea of a trust A board of trustees was set up, and all the Standard properties were placed in its hands Every stockholder received 20 trust certificates for each share of Standard Oil stock All the profits of the component companies were sent to the nine trustees, who determined the dividends The nine trustees elected the directors and officers of all the component companies This allowed the Standard Oil to function as a monopoly since the nine trustees ran all the component companies 11 The Sherman Act authorized the Federal Government to institute proceedings against trusts in order to dissolve them Any combination “in the form of trust or otherwise that was in restraint of trade or commerce among the several states, or with foreign nations” was declared illegal Persons forming such combinations were subject to fines of $5,000 and a year in jail Individuals and companies suffering losses because of trusts were permitted to sue in Federal court for triple damages The Sherman Act was designed to restore competition but was loosely worded and failed to define such critical terms as “trust,” “combination,” “conspiracy,” and “monopoly.” Five years later, the Supreme Court dismantled the Sherman Act in United States E C Knight Company (1895) The Court ruled that the American Sugar Refining Company, one of the other defendants in the case, had not violated the law even though the company controlled about 98 percent of all sugar refining in the United States The Court opinion reasoned that the company’s control of manufacture did not constitute a control of trade The Court’s ruling in E C Knight seemed to end any government regulation of trusts In spite of this, during President Theodore Roosevelt’s “trust busting” campaigns at the turn of the century, the Sherman Act was used with considerable success In 1904 the Court upheld the government’s suit to dissolve the Northern Securities Company in State of Minnesota v Northern Securities Company By 1911, President Taft had used the act against the Standard Oil Company and the American Tobacco Company In the late 1990s, in another effort to ensure a competitive free market system, the Federal Government used the Sherman Act, then over 100 years old, against the giant Microsoft computer software company This Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade This includes agreements among competitors to fix prices, rig bids, and allocate customers, which are punishable as criminal felonies The Sherman Act also makes it a crime to monopolize any part of interstate commerce An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct The Act, however, is not violated simply when one firm's vigorous competition and lower prices take sales from its less efficient competitors; in that case, competition is working properly The Sherman Act outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize." Long ago, the Supreme Court decided that the Sherman 12 Act does not prohibit every restraint of trade, only those that are unreasonable For instance, in some sense, an agreement between two individuals to form a partnership restrains trade, but may not so unreasonably, and thus may be lawful under the antitrust laws On the other hand, certain acts are considered so harmful to competition that they are almost always illegal These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids These acts are "per se" violations of the Sherman Act; in other words, no defense or justification is allowed The penalties for violating the Sherman Act can be severe Although most enforcement actions are civil, the Sherman Act is also a criminal law, and individuals and businesses that violate it may be prosecuted by the Department of Justice Criminal prosecutions are typically limited to intentional and clear violations such as when competitors fix prices or rig bids The Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison Under federal law, the maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million The Clayton Act This Act is a civil statute (carrying no criminal penalties) that prohibits mergers or acquisitions that are likely to lessen competition Under this Act, the Government challenges those mergers that are likely to increase prices to consumers All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission The Act also prohibits other business practices that may harm competition under certain circumstances There are 26 sections to the Clayton Act Among them, the most notable include: The second section, which deals with the unlawfulness of price discrimination, price-cutting, and predatory pricing Exclusive dealings or the attempt to create a monopoly, which is addressed in the third section The fourth section, which states the right of private lawsuits of any individual injured by anything forbidden in the antitrust laws Labor and the exemption of the workforce, which are covered in the sixth section The seventh section, which handles mergers and acquisitions and is often referred to when multiple companies attempt to become a single entity 13 The Clayton Act addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates (that is, the same person making business decisions for competing companies) Section of the Clayton Act prohibits mergers and acquisitions where the effect "may be substantially to lessen competition, or to tend to create a monopoly." As amended by the Robinson-Patman Act of 1936, the Clayton Act also bans certain discriminatory prices, services, and allowances in dealings between merchants The Clayton Act was amended again in 1976 by the HartScott-Rodino Antitrust Improvements Act to require companies planning large mergers or acquisitions to notify the government of their plans in advance The Clayton Act also authorizes private parties to sue for triple damages when they have been harmed by conduct that violates either the Sherman or Clayton Act and to obtain a court order prohibiting the anticompetitive practice in the future The Clayton Antitrust Act is still in force today, essentially in its original form However, it was somewhat amended by the Robinson-Patman Act of 1936 and the Celler-Kefauver Act of 1950 The Robinson-Patman Act reinforced laws against price discrimination among customers The Celler-Kefauver Act prohibited one company from acquiring the stock or assets of another firm, if an acquisition reduced competition It further extended antitrust laws to cover all types of mergers across industries, not just horizontal ones within the same sector The act was also amended by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 This amendment made it a requirement that companies planning big mergers or acquisitions make their intentions known to the government before taking any such action The Federal Trade Commission Act The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) U.S antitrust law and the promotion of consumer protection The FTC shares jurisdiction over federal civil antitrust enforcement in the United States with the Antitrust Division of the U.S Department of Justice It is headquartered in the Federal Trade Commission Building in Washington, DC The FTC was established in 1914 with the passage of the Federal Trade Commission Act Signed into law by President Woodrow Wilson, who was a strong proponent of it, the Federal Trade Commission Act was a major response to 19th-century monopolistic trusts Trusts and trust-busting were significant political concerns during the Progressive Era Since its inception, the FTC has enforced the provisions of the Clayton Act, a key antitrust statute, as well as the provisions of the FTC Act, 15 U.S.C § 41 et 14 seq Over time, the FTC has been delegated with the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations) The broad statutory authority granted to the FTC provides it with more surveillance and monitoring abilities than it actually uses This Act prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties It also created the Federal Trade Commission to police violations of the Act The Federal Trade Commission Act bans "unfair methods of competition" and "unfair or deceptive acts or practices." The Supreme Court has said that all violations of the Sherman Act also violate the FTC Act Thus, although the FTC does not technically enforce the Sherman Act, it can bring cases under the FTC Act against the same kinds of activities that violate the Sherman Act The FTC Act also reaches other practices that harm competition, but that may not fit neatly into categories of conduct formally prohibited by the Sherman Act Only the FTC brings cases under the FTC Act X Intel monopoly comes to end Intel (NASDAQ:INTC) has enjoyed a near-monopoly in the server chip market in recent years, with a market share of roughly 99% Its x86 chips are the standard, and without any real competition from Advanced Micro Devices (NASDAQ:AMD), the only other x86 chip maker, Intel has been free to enjoy its dominance Operating margin in Intel's data center segment has routinely topped 50%, and the growth of cloud computing has driven both revenue and profits higher During 2016, the data center segment generated $17.2 billion of revenue and a whopping $7.5 billion of operating income The company is now warning that data center growth will slow and margins will contract, reflecting a return of competition to the server chip market and its plan to bring server chips to new process nodes before PC chips Intel expects sales of its server CPUs to grow by just 6% annually through 2021, and for its data center operating margin to drop to the low- to mid- 40% range These lower estimates may not be pessimistic enough Intel faces three distinct threats in the data center, all of which could take away its market share and its margins The return of AMD AMD's server chip business has been insignificant for quite some time The company was once a major force, with a roughly 26% unit share of the x86 server chip market in 2006 But it has been outclassed by Intel ever since, driving its market share down near zero 15 AMD will make its return to the server chip market later this year when it launches Naples, server chips built on its Zen architecture AMD has already launched Ryzen, the PC version of Zen, and while reviews have been mixed, AMD has significantly closed its performance gap with Intel AMD still can't compete when it comes to singlethreaded performance, but Ryzen's copious cores and competitive pricing make the chips a clear winner for certain workloads Naples will come with up to 32 cores, and AMD is touting memory bandwidth and input/output capacity as the key selling points Compared to a comparable Intel Xeon chip, AMD claims that Naples will have 45% more cores, 60% more I/O capacity, and 122% more memory bandwidth If Ryzen is any indication, Naples will certainly be superior for some workloads, but it's unlikely to best Intel in general Still, Naples should make AMD a player in the server chip market once again, forcing Intel to compete for the first time in years Exactly how much market share AMD will be able to win is anyone's guess, but it's all downside for Intel The push toward an architecture-agnostic cloud Beyond AMD and x86 chips, there are two other threats to Intel's server chip monopoly ARM chips (Advanced RISC Machines) are finally making their way to the data center, with Microsoft recently announcing that its Project Olympus server design now supports both x86 and ARM chips The company is already testing ARM chips from Qualcomm and Cavium for search, storage and machine learning, and it has created a version of Windows Server for ARM processors Microsoft is not the only cloud computing company looking to lower its dependence on Intel Alphabet Inc announced last year that it was developing an open server architecture that supports the upcoming POWER9 processor from IBM Google's toolchain fully supported POWER at the time of the announcement, allowing the company to use POWER processors in conjunction with chips from Intel The push from the major cloud infrastructure providers to support different architectures is not surprising Shifting from a world where Intel is the only option to a world where there are a multitude of options will surely bring server chip prices down, allowing cloud computing to get cheaper and further eat into the traditional server market The glory days of Intel’s server chip empire are coming to an end The data center segment will continue to throw off plenty of cash for Intel, but market share and margins are going to take a hit It is impossible to predict exactly how much share Intel will lose, or how far its margins will fall But it is safe to say that Intel's server chip monopoly is not long for this world (Green, 2021) 16 XI  Citation InvestorPlace 2021 Intel Corporation: A Technology Monopoly Paying Safe, Growing Dividends (INTC) Retrieved from https://investorplace.com/2016/04/intel-intc-atechnology-monopoly-paying-safe-growing-dividends/  Power, H., Power, H and profile, V., 2021 Intel Corporation Monopoly Retrieved from http://greenwoodeconomics.blogspot.com/2012/04/by-riley-dipucchio-and-sophiepuccetti.html  Green, T., 2021 Intel's Data Center Monopoly Is Coming to an End Retrieved from https://www.fool.com/investing/2017/03/23/intels-data-center-monopoly-is-coming-toan-end.aspx  Lịch sử hình thành phát triển Intel Retrieved from https://123doc.net//document/277131-lich-su-hinh-thanh-va-phat-trien-intel.htm  Monopoly of Intel Company (2017, Apr 30) Retrieved from http://studymoose.com/monopoly-of-intel-company-essay  Principle of Economics N.Greory Mankiw  Federal Trade Commission Wikipedia Retrieved from https://en.wikipedia.org/wiki/Federal_Trade_Commission  Federal Trade Commission about The Antitrust Laws Retrieved from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrustlaws  Sherman Anti-Trust Act (1890) Retrieved from https://www.ourdocuments.gov/doc.php?flash=false&doc=51  Antitrust laws and you Retrieved from https://bitly.com.vn/h8hcv0  Clayton Antitrust Act from Investopedia Retrieved from https://www.investopedia.com/terms/c/clayton-antitrust-act.asp 17 ... worldwide with 15 production facilities globally, including facilities in the US and overseas facilities (in China, Costa Rica, Ireland, Israel, Malaysia and the Philippines) Revenue of Intel in. .. Monopoly Paying Safe, Growing Dividends (INTC), 2021) VIII How Intel gained monopoly power in the market for PC chips Legal Barriers As Intel entered the semiconductor chip manufacturing industry;... astronomical in the semiconductor manufacturing industry Intel spent more than $12 billion on R&D in 2015, representing about 22% of its total sales To maintain its technological lead, Intel must