Intel CEO Still Hopes for Second Half PC Rebound
By Yukari Iwatani
LAS VEGAS (Reuters) - Craig Barrett, chief executive of No. 1 chip maker Intel Corp., said on Tuesday he continues to hope for a recovery in demand for personal computers in the second half of 2001, despite the current major slump in the industry.
The European market is ``okay'' and, as expected, the United States was the company's ``primary weak point,'' Barrett told Reuters in an interview at the Cellular Telecommunications Industry Association conference here.
Barrett's comments come after Intel (NasdaqNM:INTC - news) issued its third consecutive sales warning earlier this month saying that first-quarter sales would fall as much as 25 percent to about $6.53 billion from the previous quarter as an economic slowdown spread beyond personal computers to networking, communications and server components.
``We're still hoping for a recovery in the second half,'' Barrett said, who also added that the Asian market should be strong but didn't provide specifics.
Some analysts have gone so far as to argue that the U.S. technology industry has entered a recession and that the PC market would indeed shrink from a year ago in 2001 for the first time in its history.
US Bancorp Piper Jaffray analyst Ashok Kumar said in a note to clients on Monday that the second half of 2001 will in fact not be a period of recovery and should ``result in negative unit growth for the PC market in 2001, a first in its history.''
``We do not believe that there will be a sustainable cyclical recovery until'' the second half of 2002, Kumar wrote.
Also, Salomon Smith Barney analyst Richard Gardner wrote in a note to clients on Tuesday that the ``most recent U.S. PC retail sales data indicates ongoing weakness in the consumer market'' for the week of Feb. 25 through March 3, with growth declining a steep 21 percent.
Banking On A Rebound, New Businesses
But even as Intel and other firms in the high-tech sector suffer through a slump, Intel says it still plans to spend $7.5 billion this year to move to more efficient and cheaper chip-making technology and larger silicon wafers, which also help to cut costs.
``We know it's is going to recover,'' Barrett said of the economy.
Intel has also been making aggressive pushes in recent years to broaden sales beyond microprocessors for personal computers, servers and laptop PCs, which account for about 80 percent of overall Intel revenue and virtually all its profit.
For example, Barrett said that its networking and communications group, which combines two of its previously separate units, now contributes 20 percent of the company's revenue. In the long-term, which Barrett didn't specify, he expects that figure to grow to 50 percent.
Also, Intel's Pentium IV chip, its newest chip, will hit its stride by the end of this year in desktop computers, Barrett said, which is when Intel plans to roll out the Pentium 4 with 0.13-micron technology in large quantities.
``I expect it to be the fastest growing microarchitecture ever,'' he said. |
