Intel aims to cut unit costs by 20%

SAN FRANCISCO: Intel Corp., the world's largest chip maker, said it has largely recovered from widely publicized product delays and problems that thwarted its 2004 cost-cutting targets.

"We have recovered from those missteps and the machine is firing on all eight cylinders in terms of new product introductions," Intel Chief Executive Craig Barrett told analysts in a New York meeting that was monitored via a Webcast.

Intel President Paul Otellini, who is designated to succeed Barrett, said the company will not meet its goal of reducing microprocessor unit costs by 15 percent this year, due to "ups and downs" at Intel.

However, he added that unit costs will fall by 20 percent between 2003 and 2006, even as Intel introduces more powerful features into its chips.

Facing Wall Street analysts who have been wary of Intel stock this year, the chip maker's two top executives highlighted the company's advanced manufacturing strength and international brand position.

The Intel executives also emphasized that its money-losing communications business was seeing increased opportunities in cellular phones, handheld computers and notebook personal computers. By 2006, third-generation cellular technology and a long-range wireless system called WiMAX will be included as options in many Intel-based notebook computers, they said.

Intel shares rose 4 cents, or less than 1 percent, to $24.05 on Nasdaq at midday.