Barrett Pins Industrys Hopes on Innovation

In his keynote at the Intel Developers Forum, Intel CEO Craig Barrett, urges high-tech companies to focus, not on reigning in spending, but on investing in new technology, particularly the chip maker's latest processors.

Despite the dark clouds that continue to hang over the computer industry, Intel Corp.s Craig Barrett yesterday forecasted sunny days ahead and another period of extended growth for high-tech, but only for those companies that can deliver innovative new products.

The chief executive of the worlds largest chip maker, in a keynote address to 4,000 attendees of the Intel Developers Forum at San Francisco, strongly urged high-tech companies not to focus on reining in spending, but investing in new technology, such as the silicon manufacturers latest processors for PCs and servers.

"For the industrial world, technology is what will lead us to new growth and economic recovery," Barrett told attendees gathered at the Moscone Convention Center. "The trend toward increasing reliance on technology for economic growth will only continue in the future."

Just as he did during a similarly themed speech at last years forum, Barrett highlighted Intels continued multibillion-dollar spending to build new manufacturing facilities capable of producing ever faster chips in larger quantities than previously possible.

In particular, Barrett announced that Intel has just recently completed and began shipping production microprocessors built at the companys new 300mm wafer facility in Oregon. The switch from 200mm to 300mm wafers and the move to a new 0.13-micron technology that enables the manufacturing of smaller processors will enable Intel to build about four times as many processors per wafer, resulting in significant cost savings per chip.

"The relentless advance of technology doesnt wait for economic recovery," Barrett said. "By moving forward with our aggressive technology and manufacturing programs, we are not far from seeing the day when we can put 2 billion transistors on a chip that operates at speeds of up to 30GHz. These are the kinds of technologies that will help our customers build great new products."

While many analysts agree that the high-tech industry has a bright future, few expect a return to the robust expansion levels of the late 90s when the rapid build-out of the Internet helped fuel growth rates of 30 percent or more year over year. Instead, most market analysts are projecting sales of high-tech goods to remain relatively flat this year and rising slightly next year.

Despite the more modest growth projections, Intel is continuing its tradition of releasing newer and faster processors into the marketplace every few weeks.

This week, for example, the company released a new top-end 2.2GHz Xeon processor for servers that includes a new technology Intel developed called hyperthreading that can boost the chips performance an average of 30 percent. In addition, the chip maker is heavily promoting an upcoming version of its 64-bit Itanium processor, code-named McKinley, planned for release this summer. The chip is targeted at the high-end server market currently dominated by Sun Microsystems Inc., IBM and Hewlett-Packard Co.

And to underscore its expanding reach into other industry markets, Intel this week will also announce a new family of networking chips as well as tout its recently introduced XScale communications processors designed for the handheld wireless market.

While Barrett admitted that it remains to be seen if the industry has finally broken free of its more than yearlong sales slump, he said he has no doubt the high-tech world is poised for an extended period of growth.

"Ive more confidence now than in any time in my 28 years in this business," he said.

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