Tech industry heavyweight Intel (NASDAQ:INTC) is having one of those up and down years. The question is: Will Intel recover, or is it in the midst of an even deeper slide?

After starting 2012 at below $25, Intel’s stock climbed steadily to $28.38 near the end of April (a seven-year high). Since then, it’s been a bumpy ride down to $20, where it’s sitting today. Adding to the turmoil came the surprise news yesterday that Intel CEO Paul Otellini is retiring in May, with a successor yet to be named.

It was expected that Intel would get a boost out of the launch of Windows 8, Microsoft’s (NASDAQ:MSFT) new operating system that PC makers have been counting on to revive desktop and laptop computer sales. That hasn’t happened so far. In The Verge, analyst Paul Thurrott says his sources at Microsoft are unhappy with Windows 8 PC sales, which are apparently “well below Microsoft’s internal projections.”

This is on top of the blockbuster news from last week that Steven Sinofsky, the Microsoft executive who led the Windows Division (and was considered by many to be a leading CEO candidate if Steve Ballmer retires) had left the company. Related or not, the high-profile departure has cast a bit of a pall over the whole Windows 8 thing.

If Microsoft is unhappy, you can bet Intel, whose chips likely power those slow-selling Windows 8 PCs, is similarly chagrined.

When you look at the state of the PC industry, it’s not hard to become jaded about Intel’s prospects. Its two biggest customers, Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) have each had a miserable year, with HP losing $8.9 billion in the last quarter on revenues that were down 5% from the previous year. Dell’s latest revenues dipped 11% on slow PC sales.

When your biggest customers are hurting, it’s difficult to succeed. But when the entire market segment you’ve built your core business around is stumbling, then you may have bigger problems.

However, as InvestorPlace contributor Richard Brand points out, Intel is not just any tech company. It has been at this a long time (founded in 1968), it has successfully overcome many challenges in its history and it’s spending big on research and development. In the past year, it has committed 17% of revenue ($9.4 billion) to R&D. On top of that, Intel has the cash on hand to spend its way out of a tight squeeze, should it come to that.

Among the current Intel good news items:

• Apple (NASDAQ:AAPL), which uses Intel chips exclusively in its iMac and MacBook PC products, has bucked industry trends with sales growth over the past year.
• Intel was a late comer to the SSD (solid state drive) market, and early models had quality issues. But SSD sales are increasing over traditional hard drives, leading IHS iSupply to call for 69% growth in SSD shipments in 2012. In the past few years, Intel has positioned itself to take advantage of this growth with a lineup of highly rated consumer and enterprise SSDs.
• Intel’s Atom line of mobile CPUs is finally beginning to gain traction with new smartphones like Google’s (NASDAQ:GOOG) Motorola RAZR i which is drawing positive reviews for the performance of the Intel processor inside.
• Microsofts Windows Surface RT tablet — powered by Intel rival ARM (NASDAQ:ARMH) chips — has had moderate initial success, but the real excitement seems to be around the much more powerful Surface Pro, which won’t be released until 2013 and is powered by Intel’s Ci5 CPU.

Given the state of affairs, is Intel a tech dinosaur on a downward trajectory that should be avoided? A company that’s throwing its CEO under the bus and scrambling?

I don’t think so. Paul Otellini was nearing retirement, and he’ll be sticking around as the search for his successor takes place. Meanwhile, the strategies he’s put in place over the past few years are beginning to bear fruit.

While Intel was definitely late to the mobile party, it now has viable, competitive products in the pipeline. More important, smartphone and tablet makers are beginning to use them. Intel has less than 1% of the mobile CPU market at this point, but that’s set to grow as Windows 8 tablets hit the market and more manufacturers consider Intel chips as a viable alternative to ARM in their smartphones.

While PC sales haven’t yet seen the boost that Windows 8 was expected to deliver, there’s a good chance that the effect is just delayed. Hundreds of millions of aging PCs are out there. They have to be replaced sometime.

And — contrary to the alarmists — iPads are not going to replace all of those computers. Some of them, sure. But most will eventually be replaced by a new PC. Whether that’s later this year or 2013, chances are that replacement PC will have Intel inside — not just the processor, but possibly the drive as well. If it’s a Mac instead of a Windows PC, that works for Intel, too.

AMD (NYSE:AMD), Intel’s biggest competitor in the PC market, is the chipmaker that’s in deep trouble. Its stock is floundering at around two bucks (down 60% on the year), it has $2 billion in debt, a new CEO who’s failed to stem the loses, no mobile prospects and news that it’s hiring a bank to explore options (such as the current go-to for desperate tech companies — selling the patent portfolio).

I’d say Intel is going to be OK and is set for a resurgence in 2013. Many analysts agree and project the stock recovering next year to somewhere in the $24 to $28 range.

As of this writing, Brad Moon didn’t own any securities mentioned here.