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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (138465)	8/2/2001 10:55:44 AM
From: tejek	Read Replies (1) \| Respond to of 1582737

Intel's Barrett Says Worst Is Over for PC Industry By Benjamin Low Reuters PENANG, Malaysia (Aug. 2) - The world computer industry is past the worst of the new-fangled technology cycle, but a full-blown rebound depends on the global economy recovering, the president of Intel Corp. said on Thursday. "The computer industry has bottomed out. That in itself tells you that you're looking at when it's gonna take off," Craig Barrett told Reuters. The world's number one chipmaker derives 80 percent of its revenues from supplying chips to computer makers and has been among the firms worst-hit by the global slowdown. In the past three quarters, the 33-year-old chipmaker has had to warn of lower sales as demand for PCs slowed. But Barrett said demand for personal computers was expected to improve in the second half of this year on buying ahead of the new school term and for the holiday season as well as by the introduction of the new Windows XP. "Any rebound in the third quarter and fourth quarter will be more seasonal than fundamental," he said, adding that the sluggish global economy has made consumption patterns difficult to predict. "It's very difficult to predict right now exactly what will happen. You have kind of a synchronous slowdown in all the economies, in the U.S., Europe and Japan," he said. Intel shares were traded via Instinet at $31.20 on Thursday morning in Europe, compared to their $30.75 U.S. close. "We're looking better after the Merrill Lynch comments yesterday and some remarks from the Intel chief executive," one dealer told Reuters. "The comment bit that caught the eye was his opinion that the PC market has bottomed and that chip sales will pick up in the third and fourth quarter," the dealer said. Barrett's comments came in the wake of a Merrill Lynch report which said the worst of the global semiconductor sector downturn was over as it raised its opinion on the sector and upgraded its recommendations on 12 chip stocks worldwide. GROWTH THROUGH NETWORKING Intel is looking to boost its presence in the networking and communications market to tap an expected surge in demand for such products in the coming years and reduce its reliance on the PC industry. "When the economy recovers, I expect the network and communications businesses to be able to grow between 30 to 50 percent a year," he said. Intel announced on Thursday it was expanding its operations in Malaysia to include the design of network processors and the assembly, testing and packaging of Pentium 4 chips. Intel has two plants in Malaysia, comprising its largest testing and assembly plant in the northern state of Penang and a motherboard manufacturing site in Kulim, in neighboring Kedah state. It expects to hire an additional 100 engineers for its network design center in Malaysia -- the company's first in Asia -- at a time when it is planning to cut workforce by 5,000 employees by year-end, Barrett said. The chip giant's expansion plans in Malaysia is in contrast to moves by some other technology-related companies to relocate to countries with lower labor costs, like China. "Right now I'm happy with the cost competitiveness here," Barrett said. Intel Corp.'s forecast of a slight rise in third quarter sales from second quarter levels is "conservative," he said. Intel last month reported a 24 percent slump in sales to $6.3 billion in the second quarter. The Santa Clara, California-based firm forecast sales of between $6.2 billion and $6.8 billion in the third quarter. With prices of chips continuing to decline, mainstream prices for PCs using Intel's Pentium 4 microprocessors are expected to fall to the $800 range within the "next few months," he said. That will boost demand for Pentium 4 chips, giving Intel an upper hand over rival Advanced Micro Devices (AMD) which analysts say has had trouble making chips at equal speeds profitably. Intel's Pentium 4 chips are now running at speeds of up to 1.8 gigahertz with a 2 gigahertz chip set to be launched later this month. But the move to make Pentium 4-based PCs more affordable and boost its popularity in the mass market will come at a price. "The increase in Pentium 4 volumes will be at the expense of Pentium 3 volumes," Barrett said. "It's no secret that the Pentium 4 is more costly to produce. But our success is predicated on introducing new technology to the marketplace and not maximizing short-term profits on existing products." 07:30 08-02-01 Copyright 2001 Reuters Limited.