Intel Sees Modest Third-Quarter Growth
August 27, 2002 06:02:00 AM ET
By Wong Choon Mei
PENANG, Malaysia (Reuters) - Intel Corp, the world's No. 1 chipmaker, said on Tuesday it expected modest growth in third-quarter earnings over the preceding quarter and would continue investing in new technology despite the weak market.
Intel Chief Executive Officer Craig Barrett gave his cold-eyed assessment of the market for chips while attending a hi-tech conference to mark the 30th anniversary of the setting up of Penang as Malaysia's hub for the industry.
``We see modest growth in the third quarter over the second quarter,'' Barrett told a news conference.
``But we haven't seen much improvement in the computing environment because companies are not investing. When it turns around will be when companies start re-investing, I'm not forecasting when that will happen.''
Earlier this month, Intel said it expected third-quarter revenues would be $6.9 billion, compared with an earlier forecast of $6.3 billion. It reported a net income of $446 million for the second quarter, at the lower end of market expectations.
The company also said it would cut 4,000 jobs worldwide or nearly five percent of its workforce.
INTENT ON SPENDING
Barrett said Intel, which poured $7.3 billion into capital spending last year, had little choice but to plough money back into new technology.
``Not investing would be a prescription for future failure,'' he said. ``We will continue to invest for the long-term.''
Two weeks ago, Intel detailed plans to make the world's smallest microchips based on so-called 90-nanometer technology at its dozen or so plants around the globe by the second half of 2003. It currently makes chips based on 130-nanometer technology.
Intel's push into tinier circuitry promises to ensure its pole position in the industry at a time when the sector is suffering one of its worst downturns, and many of its rivals are cutting back on spending plans.
``The technology will bring us the positive characteristics that are linked to dimensions of transistors,'' said Barrett, adding that Intel planned to further miniaturize chips to a 60-nanometer scale in two years time.
Microprocessors, the brains inside a personal computer, contain billions of circuits, each of which are one thousand times thinner than a human hair. A nanometer is one-billionth of a meter.
ADVICE FOR MALAYSIA
Barrett also announced Intel would open an operations service center in Malaysia, the first outside the United States.
But he advised the country to invest more in research and development if it wanted to stay competitive.
With lower-cost sites like China and Vietnam becoming powerful competitors, Malaysia needed to add value to its product base to stay in the game, he said.
``Malaysia needs to move up the chain and give more value-adds rather than just stay a manufacturing base,'' he said.
Intel was among eight pioneer foreign firms to set up a plant in the northern state of Penang in 1972.
Barrett also urged Malaysia to improve broadband infrastructure and to focus on technical skills training.
``You need a large number of engineers to push the industry forward. Russia and India are two examples of where there is educational excellence and Malaysia needs to be in that group.''
August 27, 2002 06:02:00 AM ET
By Wong Choon Mei
PENANG, Malaysia (Reuters) - Intel Corp, the world's No. 1 chipmaker, said on Tuesday it expected modest growth in third-quarter earnings over the preceding quarter and would continue investing in new technology despite the weak market.
Intel Chief Executive Officer Craig Barrett gave his cold-eyed assessment of the market for chips while attending a hi-tech conference to mark the 30th anniversary of the setting up of Penang as Malaysia's hub for the industry.
``We see modest growth in the third quarter over the second quarter,'' Barrett told a news conference.
``But we haven't seen much improvement in the computing environment because companies are not investing. When it turns around will be when companies start re-investing, I'm not forecasting when that will happen.''
Earlier this month, Intel said it expected third-quarter revenues would be $6.9 billion, compared with an earlier forecast of $6.3 billion. It reported a net income of $446 million for the second quarter, at the lower end of market expectations.
The company also said it would cut 4,000 jobs worldwide or nearly five percent of its workforce.
INTENT ON SPENDING
Barrett said Intel, which poured $7.3 billion into capital spending last year, had little choice but to plough money back into new technology.
``Not investing would be a prescription for future failure,'' he said. ``We will continue to invest for the long-term.''
Two weeks ago, Intel detailed plans to make the world's smallest microchips based on so-called 90-nanometer technology at its dozen or so plants around the globe by the second half of 2003. It currently makes chips based on 130-nanometer technology.
Intel's push into tinier circuitry promises to ensure its pole position in the industry at a time when the sector is suffering one of its worst downturns, and many of its rivals are cutting back on spending plans.
``The technology will bring us the positive characteristics that are linked to dimensions of transistors,'' said Barrett, adding that Intel planned to further miniaturize chips to a 60-nanometer scale in two years time.
Microprocessors, the brains inside a personal computer, contain billions of circuits, each of which are one thousand times thinner than a human hair. A nanometer is one-billionth of a meter.
ADVICE FOR MALAYSIA
Barrett also announced Intel would open an operations service center in Malaysia, the first outside the United States.
But he advised the country to invest more in research and development if it wanted to stay competitive.
With lower-cost sites like China and Vietnam becoming powerful competitors, Malaysia needed to add value to its product base to stay in the game, he said.
``Malaysia needs to move up the chain and give more value-adds rather than just stay a manufacturing base,'' he said.
Intel was among eight pioneer foreign firms to set up a plant in the northern state of Penang in 1972.
Barrett also urged Malaysia to improve broadband infrastructure and to focus on technical skills training.
``You need a large number of engineers to push the industry forward. Russia and India are two examples of where there is educational excellence and Malaysia needs to be in that group.''
