Intel Spending Its Way Through The Downturn - InformationWeek

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Intel Spending Its Way Through The Downturn

The economy may be slowing, but Intel isn't, said CEO Craig Barrett in his keynote speech at the Intel Developer Forum in San Jose. Barrett hit on topics ranging from how Intel plans to weather the slowing economy to minutiae about its latest manufacturing breakthroughs.

Despite what he called "a definite slowdown" in U.S. manufacturing, Intel will increase R&D and capital spending this year and next. "We can grow our way out of this recession with great new products," Barrett told a packed audience at the semiannual tech fest.

In its fourth quarter, ended Dec. 30, Intel blamed flat sequential revenue on a slowing worldwide economy. But this morning Barrett said the business-to-business E-commerce infrastructure is still in its infancy. In fact, he said, vendors would be foolish to significantly scale back plans in face of the current slowdown. "You can never save your way out of a downswing," he said, noting that Intel will invest $12 billion in research and development and manufacturing this year.

Barrett also said Intel has no plans to scale back its technology road map. With that in mind, the company today unveiled a low-voltage 700-MHz Pentium III processor that will be the company's fastest chip for the rapidly growing lightweight notebook market. The new chip is the latest in a series of mobile launches by Intel, which of late is facing pressure in that sector from upstart Transmeta Corp. Within the current quarter, company officials said Intel will introduce a mobile chip that runs at 1 GHz.

At the other end of the computing spectrum, Intel execs Tuesday said the company is on pace to introduce its powerful but long-delayed 64-bit Itanium chip in the second quarter. The chip was scheduled to launch last year, and some analysts say Intel's tardiness may hurt Itanium sales. "At this point, you will probably see a lot of people wait for the next generation," said Merrill Lynch analyst Joe Osha, in attendance at the conference. A faster version of Itanium, dubbed McKinley, is set to debut next year.

Also Tuesday, Intel said it will launch a 900-MHz version of its Pentium III Xeon chip in six weeks and a Pentium 4-based Xeon chip in the second quarter. Further, the company is developing prepackaged arrays of chips, dubbed Telco building blocks, that hardware vendors could sell in systems aimed at service providers. Intel executive VP Paul Otellini said at the conference, "We're taking segmentation to a new level."

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