Despite PC Slump, Intel Ups Capital Investment According to Cahners In-Stat/MDR.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--April 17, 2001

Despite the economic slowdown shaking the PC industry, Intel Corp. continues to spend a record amount on next-generation process technology, according to Cahners In-Stat/MDR.

However, the slowdown has impacted the semiconductor giant, as the construction of one of three fabs (Fab 24) supporting 300mm (12-inch) wafers has been delayed from the second half of 2002 until the third quarter of 2003, the high-tech market research firm finds.

Despite recent economic downturn, the company has continued to invest in new fab construction. Intel's capital expenses were $6.7 billion in 2000 and will grow to $7.5 billion in 2001, even with the postponement of Fab 24 expenses.

But, if the PC slump continues, Intel may be forced to cut back capital and R&D spending, which could hamper a quick ramp up of the 0.13-micron process that is essential to bringing Pentium 4 into the mainstream.

"The Fab 24 opening delay and associated 0.13-micron capacity reduction could lead to a shortage similar to one that occurred in late 1999 and early 2000, when the company did not have sufficient capacity to meet rapidly increasing demand for the Coppermine-based Pentium III," said Kevin Krewell, senior analyst with In-Stat/MDR's Intel PC Processor Service.

If that occurs, the company may have to curtail plans to expand in high-growth markets such as flash memory, networking, and wireless -- all of which require considerable amounts of silicon. According to Krewell, "All in all, Intel has moved fairly rapidly to adjust to the worldwide PC downturn. It does face considerable risk, however, if the market rebounds much faster or slower than expected."

In-Stat/MDR has also found that:

-- Intel's next major process transition will occur late in this year's second
quarter when the company begins shipping products based on its 0.13-micron
process with copper interconnects on 200mm wafers. In another key transition,
the company will introduce a 300mm wafer in early 2002.

-- Intel's average die costs will rise this year with the ramp up of the
Willamette-based Pentium 4. These costs will peak in the first quarter of 2002
and begin to fall later in the year as Intel migrates the Pentium 4 processor
to the smaller 0.13-micron Northwood die, which should reduce the average die
cost to $46.

The report, "Intel Microprocessor Forecast - Manufacturing Capacity and Die Cost," (No. IN0101IN), provides an analysis of Intel's manufacturing capabilities and chip manufacturing costs. To purchase this report, or for more information please visit http://www.instat.com/catalog/cat-semi-intel.htm#in0101in or contact Erin McKeighan at 480/609-4551; [e-mail].

The report price is $1,995 USD.

Cahners In-Stat Group (http://www.instat.com/) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.

In-Stat is proud to announce that it has joined forces with MicroDesign Resources (www.mdronline.com), a Cahners property focused on enabling technology for personal computers and the high-performance microprocessor industry. Combined, In-Stat and MDR offer even broader coverage from end-users all the way to engineering level technology.

In-Stat and MDR are units of Cahners Business Information (www.cahners.com), a leading provider of critical information and marketing solutions to business professionals and a member of the Reed Elsevier plc group.