As part of Intel's massive cost cutting plans, it accelerates its move to 0.18 micron...............
news.com
Excerpt:
<<"We will increasingly put emphasis on the cost side," Grove
told the assembled throng of four hundred financial analysts.
As part of this effort, the company is also making an
aggressive push to have more computer manufacturers, PC
circuit board makers, and distributors conduct their purchases
on-line, which cuts inventories and reduces transaction costs.
The focus on costs largely comes from the economics of the
chip industry, said Andy Bryant, Intel's CFO. The average
selling price on Intel's chips has stayed relatively flat for the
past five quarters but expenses for labor, product materials,
and plant investment have gone up. As a result, gross margins
have declined by nine percentage points.
Intel has already cut back on administrative and discretionary
costs, said Bryant. Intel also re-negotiated pricing for
materials. "In the fourth quarter, costs will actually step down
for the first time in a while," he said. Still, in 1999 the company
will examine ways in which the structure of the business can
change to eliminate further expense.
Among the cost cutting measures:
Intel will strive to reuse 70 percent of its chip making
equipment for the succeeding generation. Re-use of equipment
has already saved more than a billion, said Bryant.
Intel will move quicker between one generation of technology to
the next, said CEO Craig Barrett. In other words, Intel will shift
to the next-generation 0.18-micron manufacturing process
quicker than it shifted to the current 0.25 process.
Packaging and other materials that go into chip making will be
more heavily scrutinized.
On-line order management and purchasing will proliferate.
Currently, the company has approximately 200 customers in
30 countries ordering products on-line. This will substantially
expand in 1999
The company will also try to raise its average selling prices by
changing its chipsets and motherboards less frequently, said
Pat Gelsinger, corporate vice president of the desktop
products group. Chipsets are companion chips to the
processor, while motherboards are the main PC circuit board. >> |
