Australia must focus on R&D—Intel CEO

SYDNEY: Australia needs to dig deeper into its pockets and spend more on research and development if it wants to sharpen its competitive edge, Intel Corp chief executive Craig Barrett said on Monday. During a stop in Sydney on a whirlwind Asian tour, Barrett said Australia should boost broadband high-speed Internet access and improve its IT infrastructure if it wants to play a bigger role in burgeoning Asian markets.

"Intel by itself spends more than US$4 billion a year on R&D, my company outspends your country substantially," Barrett told a briefing. "My revenue base is not nearly as high as your GDP base so I think you're not spending enough here," he added.

Australian businesses spent around A$4.8 billion ($2.6 billion), or 0.72 percent of gross domestic product on R&D in 2001/01, below about 11 OECD countries, with American businesses spending 2.08 percent of GDP, the Australian Bureau of Statistic said.

Less than 250,000 of Australia's Internet subscribers use broadband to connect to the Internet, compared to South Korea where around 80 percent of homes on the Internet use broadband and the United States with around 20 percent. Australia's main telco Telstra Corp Ltd. plans to have one million subscribers by 2005.

Intel said it had no plans to set up manufacturing facilities in Australia. However it preferred emerging Asian economies because the labor rates were lower. Barrett would not answer questions ahead of Intel's mid-quarter business update on Thursday on how product demand was shaping up after the traditionally slow summer period. However, the IT industry would take longer than the broader economy to pull itself out of the financial doldrums, he said.

"I don't think you'll see much of a pickup in the established economies until you start to see GDP growth translating into profitability, which translates into corporate reinvestment in IT infrastructure," said Barrett. "The IT sector will probably be a lagging indicator to economic recovery in those three economies, Japan, the U.S. and Western Europe," he added.

While established economies continued to languish, Asia, Latin America and Eastern Europe were performing strongly, said Barrett. Shares in the Santa Clara, California-based firm last traded down 2.7 percent at $16.67 and has dropped 15 percent since August 21 on earnings concerns.

© Reuters