Overcapacity, Demand Aren't Concerns, Intel's Barrett Says - InformationWeek

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Overcapacity, Demand Aren't Concerns, Intel's Barrett Says

Speaking to business leaders in India, the Intel CEO says the company will invest $40 million to expand a design center in India. He also downplays inventory concerns and other concerns, saying press and analysts have a "one-day outlook."

Intel Corp., the world's largest computer chip company, is not suffering from overcapacity and new areas are emerging that will increase global demand for microprocessors, its chief executive said Friday.

``We build our capacity based on the long-term growth outlook for the industry,'' Intel CEO Craig Barrett told business leaders on the second day of his visit to India.

He also said Intel will invest $40 million over the next two years to expand its design center in the southern Indian city of Bangalore, where future versions of its business and mobile computer chips will be designed.

The money will be used to develop Intel's Centrino wireless chips and microprocessors, he said. Intel's Bangalore center currently employs 2,400 people.

Barrett defended Intel's expansion of production capacities and high levels of inventory that have outstripped current levels of sales.

Intel currently has inventory worth nearly $3.18 billion, sparking fears it might have offer discounts to computer companies.

Barrett maintains the market has enough appetite to recover from imbalances in demand and supply. ``Capacity and demand are in balance for about one microsecond every three years,'' he said.

``The popular press and financial analysts often tell us to do the wrong thing ... They typically have a one-day outlook,'' he said.

An increased use of computers to study patterns in an individual's genes and provide more accurate treatment would drive the sales of chips in the coming years, he said, as would a new wireless communication standard, called Wi-Max. Intel will launch its first chips based on the Wi-Max standard next year.

Wi-Max is an extension of the increasingly popular Wi-Fi. standard. Equipment made with the new standard will have the potential to communicate over a range of up to 30 miles.

With Wi-Max, ``we will offer our customers competitive advantage over some of the competing technologies ... such as cable and TV,'' Barrett said.

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