Intel may consider cost cuts.
06/23/2001 12:34:43 AM MDT Albuquerque, Nm
By Dustin D. Brand; Owner AMO
Only a day following their Tualatin launch, Intel will consider cuts unless the market improves.
Intel said on Wednesday it needed to see a recovery in the chip market within six months or it would consider cutting capacity and investments next year.
The semiconductor market has taken a hard hit this year with PC Sales down, also affecting DRAM Memory prices which fell by 80%.
Intel Chief Executive Craig Barrett, traveling through Europe this week, also said delays in building factories in Israel and Ireland would not affect Intel's $7.5 billion investment plans this year, but could affect next year's budget.
Intel, the world's largest chip maker, is the only semiconductor maker that has stood strong to its investment plans, both in research as well as new factories and equipment.
"We haven't changed guidance (to spend $7.5 billion in capital expenditure). But the slowdown has modulated demand somewhat. If the slowdown hadn't occurred we might have spent more," Barrett said this week. "My expectation is we'll watch what goes on in the next three to six months, and then if we don't see any improvement at that time, we'll seriously look at both the installed infrastructure we have plus what we want to spend on investment next year," Barrett added.
"We perceive that we're at a stable bottom of this trough. We're looking for some seasonality in the second half, which should give some uptick. We're kind of bouncing along at what we perceive as the bottom at this stage," he said.
"I wouldn't disagree that the economic slowdown has impacted the ramp of Pentium 4, and even sales in the entire computer industry," Barrett said.
The slagging semiconductor market has had worldwide reaction. In only seven trading days the Dow Jones European Technology Stoxx Index has fallen 21 percent from 560 points to 440 points in the wake of warnings from Finnish mobile phone maker Nokia, Canada's telecoms equipment maker Nortel and German chip maker Infineon. Intel lost 13 percent of it's stock price to $26.85, since its update on June 7.
Related AMO Articles:
Intel rolls out the Tualatin
Gordon Moore leaves Intel.
Moores Law needs more.
Intel launches fastest Pentium Yet
Intel profit down 64%
Intel cuts prices, AGAIN!
The Intel GIGA PC
Intel retires PIII XEON Line
Intel to release 1GHZ Mobile PIII
Intel cuts prices by 19%