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To: Don Green who wrote (70956)	4/26/2001 1:40:45 PM
From: Don Green	Respond to of 93625

Thursday April 26 12:50 PM ET Intel Reiterates Capital Spending Plans By Duncan Martell NEW YORK (Reuters) - Intel Corp. Chief Executive Craig Barrett said on Thursday that his company still plans to spend $7.5 billion in capital expenditures this year, as well as $4.2 billion on research and development, as the world's largest chipmaker seeks to steam through the current high-tech doldrums. ``We reiterate again today we're going to spend $7.5 billion,'' Barrett told reporters at a breakfast ahead of the company's analyst meeting here. Many analysts have expressed increasing skepticism that Intel would indeed spend the full forecasted amount, given a downturn in demand for personal computers and a slowing U.S. economy. Barrett's comments sought to dispel those concerns. Despite the slowdown in the U.S. economy, signs that the malaise is spreading to Western Europe and the persisting weakness in the communications industry, Intel is moving ahead to ensure that it is well positioned when demand bounces back. This stands in marked contrast to the posture of other high-tech companies, which in times of economic difficulty, retrench and seek to build market share at the expense of weaker rivals. ``We have confidence in our future,'' Barrett said. The semiconductor industry, over its history, has -- on average -- grown at 16 percent to 17 percent a year, Barrett said, adding that ``I don't think there's any reason that it won't continue to grow at the rate going forward.'' More than half of U.S. households now have a personal computer, and Barrett said that Europe still has only half that penetration rate and Asia is still in the ``low single digits'' in terms of percentage of homes with PCs, figures that represent potential continued long-term growth for the 33-year-old chipmaker. Also, Santa Clara, Calif.-based Intel continues to see a ''seasonal uptick'' in the second half of the year, head of sales Michael Splinter said at the breakfast meeting. He was reiterating comments made by the company's Chief Financial Officer Andy Bryant last week when the company reported first-quarter net income that dropped 82 percent and sales that were the lowest since mid-1998. ``There are indications now showing that we are at the bottom of the trough,'' Splinter said. Inventories among its customers, PC makers, are now back at historical levels, Splinter said -- following a buildup in the fourth quarter. Additionally, Intel said its 2 gigahertz Pentium 4 chip was on track to be available in the third quarter of 2001. Earlier this week, it introduced its 1.7 gigahertz Pentium 4, now the world's fastest chip for desktop computers. The 2 gigahertz Pentium 4 will likely allow Intel to retain its crown of having on the market the fastest microprocessor -- the primary computing engine of a personal computer -- as it continues to do battle with rival Advanced Micro Devices Inc. In slides prepared for a meeting with analysts here, Intel said its Pentium 4 chip made using 0.13 manufacturing technology is still on track for availability in the fourth quarter of this year. The company said that ``Europe was maintaining relative stability'' and that the outlook for PC and computer server sales in that region is steady, adding that there are pockets of strength in Eastern Europe and the Middle East. Much of Intel's capital spending this year is devoted to upgrading its plants and equipment to use larger, dinner-plate-sized silicon wafers -- from which chips are made -- from the current salad-plate-sized ones. Intel has said this move will allow it to get almost 2-1/2 times more chips from the larger wafers than from the current ones and will cut costs by 30 percent. A large portion of its spending plans is also aimed at moving Intel to 0.13 micron manufacturing technology, which further boosts chips per wafer and cuts costs. Intel shares rose 56 cents to $29.55 on the Nasdaq on Thursday. The stock has underperformed the Philadelphia Stock Exchange Semiconductor index since the beginning of this year by about 16 percent. However Intel shares, considered a bellwether for the health of the technology sector, underperformed the Standard & Poor's 500 index by only 2 percent during that same time frame.