Chandrasekher said Intel is sticking with its target to spend $7.5 billion on capital expenditures and another $4 billion on research and development this year.
``This is part of what we call our ''breaking away strategy," he said.
biz.yahoo.com
Tuesday August 7, 3:04 pm Eastern Time
Intel exec says price-cuts not only play on Pentium 4
BOSTON, Aug 7 (Reuters) - An Intel Corp. (NasdaqNM:INTC - news) executive said on Tuesday that steep price-cutting is not the only play for the world's largest semiconductor maker as it moves to replace its Pentium III microprocessor with the Pentium 4 by the end of the year.
--------------------------------------------------------------------------------
Intel's Pentium 4 comes with better yields and lower material costs, said Anand Chandrasekher, Intel's vice president of architecture and marketing. Those efficiencies could help stabilize Intel's profits amid an ongoing price war with rival Advanced Micro Devices Inc. (NYSE:AMD - news)
But the Pentium 4 chip, made using smaller geometries, meaning that Intel can get more chips out of a single wafer and put more transistors on a chip, won't be available in large quantities until late August, wrote Lehman Brothers analyst Dan Niles in a note to clients on Monday.
Until then, Intel's gross margin percentage could be under pressure, cutting into the bottom line. Intel has forecast that its gross margin for the third quarter will be 47 percent.
At a technology conference hosted by U.S. Bancorp Piper Jaffray in Boston, Chandrasekher declined to comment on an analyst report that said Intel is planning to drop a ``price bomb'' on AMD by cutting prices about 50 percent on high-end Pentium 4 processors on Aug. 26.
Chandrasekher reiterated Intel's goal of replacing all Pentium 3 chips - from top to bottom in the desktop PC market -- with the Pentium 4 by the end of the year. The company's goal is to make the Pentium 3 obsolete, he said.
During the past 20 years, he said history has proven that computer users will continue to want semiconductors with better performance.
It is a dire time for Intel as industry analysts expect personal computer shipments to decline this year. Intel derives nearly 80 percent of its revenue from supplying chips to computer makers.
Chandrasekher said Intel is sticking with its target to spend $7.5 billion on capital expenditures and another $4 billion on research and development this year.
``This is part of what we call our ''breaking away strategy," he said.
Also on Tuesday, Credit Suisse First Boston cut its investment ratings on a wide range of semiconductor chip industry companies, adding fuel to investor concerns about how long the industry downturn will last.
Credit Suisse said it now expects personal computer shipments to decline this year, revising downward its previous forecast that shipments would be flat. CSFB cut its forecast for 2002 PC shipment growth to 10 percent from 17 percent.
``The current downturn is more unlike than like any preceding downturn,'' the brokerage said in a note to clients. ``Current conditions are a function of both oversupply and under-demand.''
Email this story - Most-emailed articles - Most-viewed articles
-------------------------------------------------------------------------------- |
