Intel (INTC) looks toward new markets

Intel (NASDAQ: INTC) knows that the market for basic server and PC chips will not grow as fast over the next five years as it did over the last five. The economy plus high market penetration will see to that.

So, Intel is looking to new markets to save its bacon. It has already entered the segment for relatively low-powered chips for handheld "computers." Whether that business will ultimately be large is anyone's guess.

According to The Wall Street Journal, the world's largest chip company "is providing the first details of a chip technology that is designed to help break into new markets, starting with high-end graphics used for computer games and animation." This technology will help higher end PCs run games and video content.

With Intel's balance sheet and big share of the current PC market, the announcement could spell gigantic trouble for AMD (NYSE: AMD) and Nvidia (NASDAQ: NVDA). A little over two years ago AMD bought graphics chip company ATI. So far, the deal has been a bust.

Concerns that the graphics chip market could get crowded and that margins could be under pressure have already driven AMD and Nvidia to recent 52-week lows. Over the last year, Intel shares are off about 5%. Shares in the other two companies are down over 60%. With Intel coming into the market, that could actually get worse.

Douglas A. McIntyre is an editor at 247wallst.com