We are not moving, says Barrett
PENANG: Chip giant Intel Semiconductor will continue to aggressively invest in Asia Pacific to stimulate the PC market despite the regionís financial crisis.
President and chief operating officer Craig Barrett told a press conference here last week that Asia Pacific was still a growth area and has committed US$1 billion of capital investments for the region.
The company has committed US$5 billion in capital investments worldwide and another US$2 billion for research and development. "The five flat revenue growth quarters we had experienced was a jolt to us and our biggest challenge is to get back on track," he said.
He added that the slowdown in the chip market and lack of anticipated orders from the customers also affected the companyís performance. "The only way to recover from a crisis is by accelerated development of new products and services," he said.
Intelís revenue had been stagnant at about US$6.2 billion over the past five quarters. Earlier this month, it announced that its first quarter revenues are expected to drop 10 percent below the previous quarter. Last quarter the company reported a net income of US$1.7 billion.
Although growth in Thailand, Korea and Indonesia were affected by the crisis, Barrett named China, India and Pakistan as leading growth areas. "The Chinese growth maybe slowing but its PCs growth at 30 per cent is well above the worldwide average. It will pass the Japan relatively soon if the Japan market continues to remain weak," he said, adding that Japan has been weak for two years.
He said that the company will invest US$430 million in Malaysia to ramp up production and improve processor packaging technologies. Last year, the company spent US$400 million on expansion and production programs at its facilities here. Intelís test and assembly facilities in Penang and Kulim ship out an array of Pentium II processors for the desktop and notebook PCs.
Barrett, who will replace Andrew Grove as chief executive officer in May, said that the company will aggressively pursue new uses and new users for microprocessor technology and will further its foray into areas like digital imaging, graphics, networking and e-commerce. "We will continue to improve the PC architecture to include scalable performance, IP telephony, video conferencing and Internet media," he said.
Divide and rule
Barrett said that the company was getting better at introducing more complex products which need fewer mass iterations to make high volume products allowing them to bring products to market faster. "We are seeing a strong segmentation of the market which is safe and are getting excellent acceptance at the high end," he added.
The company will introduce its low-end 266MHz chip, Celeron, targetted at sub-US$1,000 PCs on April 15.
Last November, Barrett rolled out its Pentium II roadmap based on delivering specific products for every segment of computing from basic low end PCs to servers and workstations at the high end. All the products will be based on different implementations of the Pentium II processor.
"The potential at the low end and high end is very high for us and the 32-bit server space is a major area for us.
"By mid-1998 we will introduce server workstations based on Pentium II architecture with a full speed backside bus, local cache and high speed front side bus. This product will not find its way to the low end," he said.
He added that Merced, due out in mid-1999, had secured the commitment from RISC-hardware vendors such as Sun Microsystems, IBM, Silicon Graphics, Digital and Hewlett Packard. Although Intelís paranoia has led them to cover all bases in the market, Barrett claimed that the Intel architecture brings more value to the marketplace.
By Anita Devasahayam
Published in In.tech, The Star, Star Publications, April 7, 1998