Intel: skeptics
again made a mistake?
(C) Alex Smal
(C) Computer Review
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Leadership position of the semiconductor industry -
companies Intel - seems unshakable, but about a year ago,
forecasts Analysts were not for her bright and predicted the
first decline this decade. But, nevertheless, the company could
maintain its position and has recently even announced that it
expects to increase annual sales by 8-10%. So due to what Intel
also managed to stay afloat, and that it expects in the future?
One of the most important steps the company has
transition year and a half ago to a new strategy, the essence
of which - the division issued its products in several
categories, such as processors for low-cost PC processors to
mainstream PC processors for high-end corporate servers. Such
an approach Intel due to the compensation of small gains from
the entry-level processors (currently Celeron) significant
revenue from sales of high-performance chips for desktops and
servers, such as Pentium II Xeon, held for five quarters the
average price of its products virtually unchanged at about
$ 210.
However, some experts believe that
although, according to some estimates, the processors
Xeon class must this year to bring Intel order of $ 1.8 billion
(approximately one-fifth of all profits) to make major
rely on them still quite risky. The problem here is in the world
economic crisis and the urgent need to correct a mistake in
2000, due to which companies can refrain
1999 from bulk purchases of PCs top
level. Incidentally, it is believed that the first
factor may lead to further increase the demand for cheap
computers, this case, Intel will have to seriously compete with
companies such as AMD and National Semiconductor, in fact, for
example, share of PC sales, with its processors cost less than
$ 1000 in retail stores in the United States today is less than
30%. True, the last steps Intel, in particular, the maximum
depreciation of lower-level processors (Issue Celeron processor
in Socket 370) indicate that the company does not intend to
tolerate such a state of affairs. According to some reports in
the last quarter of last year output Celeron was doubled and
increased to 8,000,000 pieces, which exceeds that of all the
competitors together combined. But while Intel will continue to
pay due attention to the average sector, which today is Pentium
II. Last year, the share of sales of Pentium
II amounted to 56% of total revenue in
largely due to the fact that, for some
estimated that 97 out of 100 PCs costing more than
$ 1500 is equipped with these processors.
No less ambitious plans and Intel, associated with the Xeon.
In 1999, she plans provide a more rapid version of this
processor with clock speeds above
600 MHz and more inclusive cache L2, and thus continue to
expand its influence in the market servers and workstations. To
date, Intel is almost completely controls the processor market
for servers costing up to $ 10,000 and is projected to by 2002
it will belong to a large part of the processor market for
servers worth up to $ 100000. One can not but
mention some of the planned Intel internal measures aimed, in
particular all at lower costs. So, companies
already managed through the use of technology
videoconferencing to reduce travel expenses of its employees
are planned staff reductions in 3000 people (to bring the
number of employees up 61000). In addition, Intel is
increasingly using e-commerce and shakes its customers to send
orders via the Internet, which reduces the cost of their
processing and increased productivity. These, as well as
several other measures will enable the company estimated that
savings in the current year about $ 45 million
However, further increasing incomes
Intel expects to achieve by reducing production costs. Say, the
transition from 0.25 micron to 0.18-micron technology, which
the company plans to implement in the next six months, will
allow up to 75% more efficient use of silicon substrates, and
thus significantly reduce the cost of ready-made CPUs.
And after upgrading to 0.18-micron
technology, the company will continue to use the 70% already
have her equipment, ie, bulk purchase of new equipment is
planned.
Intel is also a lot of attention is given to new promising
markets such as Latin America and China (which, seems to have
given up on AMD and National Semiconductor, focusing
on expanding its business in the U.S.).
While Intel has obtained all (at
so it seems from the outside), and even her
shares after 32% fall in first half of last year, jumped to a
mark - 115 points, reversing the predictions of skeptics to the
effect that a collapse in prices on the PC will shallowing of
money, "Rivers", flowing into the company. Maybe another
prediction come true - about the fact that this year Net profit
of the semiconductor giant reach a record 8.2 billion dollars
in annual revenue 33 billion?
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