At the companys analyst meeting with Wall Street analysts in New York City, Intel chairman Craig Barrett said that the company is using technologies like 90-nm manufacturing and 300-mm wafers to cut costs. Executives also positioned the recent elimination of the Tejas processor as a streamlining of the companys roadmap and pledged to get back on track in flash memory and cellular handsets.
The technology sector has begun to track upwards since 2003, following two years of steady losses caused by the dot-com bust. Likewise, Santa Clara, Calif.-based Intels fortunes have been steadily improving. In each of the last two years, for example, Intels costs have decreased while its operating profits have risen, according to Andy Bryant, the companys chief financial officer.
"When you have the best technology…you get the best profits," Bryant said.
Intels analyst meetings are usually geared toward the Wall Street crowd, who have their collective eye on Intels bottom line. As a result, Intel executives emphasized the companys financial strengths, such as a presentation Bryant made showing how a microprocessor fab could be converted to manufacture chip sets and flash memory without the cost of being scrapped and rebuilt. Instead, they can be upgraded to use next-generation equipment, Bryant said. On several occasions Bryant and others reiterated that Intel was a profit-making company.
Those profits, however, are quickly reinvested. "The fundamental here is that the technology does matter," Barrett said. "Long term, we are entering a period of sustained growth, rational growth, and I think you need to invest to take advantage of that. That is what Intel has been doing."
In 2003, Intel recorded $21.7 billion in revenue from microprocessors; in total, 90 percent of the $30.1 billion Intel recorded for the year derived from sales of silicon, Bryant said. Seventy-five percent of the total revenue derives from out of the United States, which is beginning to set the trends in personal computing. "Many members of our companies look to emerging trends in Japan in Asia rather than in North America and Europe," Barrett said.
In return, Intel has pledged to spend about $3.8 billion in capital expenditures, mostly in upgrading its fabs to its new 90-mnm process, and conducting preliminary research in 65-nm technology, which will enter production in the second half of 2005.
To grow the companys business still further, customers should expect to see Intel invest between $20 million and $300 million to develop an "infrastructure" of hardware and software companies in new technologies, Barrett added.