Intel narrows Q1 forecast, Otellini forecasts growth

PENANG: Intel Corp.'s decision to narrow the range of its first quarter

revenue guidance is a signal the business is doing slightly better than it had

expected, the microprocessor maker said on Wednesday.

Paul Otellini, newly-elected president and chief operating officer of the

world's largest chipmaker, said the firm remained optimistic the industry would

grow this year after its worst ever year in 2001.

Last Thursday, Intel narrowed its first quarter sales forecast to between

$6.6 billion and $6.9 billion from an earlier range of $6.4 billion to $7.0

billion. "That's a fairly strong signal that things are a little bit better

than we first thought," Otellini said, though he declined to give further

details.

The Santa Clara, California-based chipmaker expects industry volumes to

return to growth this year, tracking typical seasonal trends after plunging to

historical lows last year. "Last year was so poor that it is very likely

the industry will grow year-on-year this year just because it's not

shrinking," Otellini told reporters during a visit to the company's plant

in the northern Malaysian state of Penang.

"We are reasonably optimistic about this year. We believe that this year

is going to play out in a seasonal pattern the way it has historically except

for last year." The technology bellwether's expectations of a brighter year

underscore budding confidence in financial markets that the US economy is on the

path to recovery, buoying global stocks.

Second half strength



Semiconductor sales typically strengthen in the second half and Intel, which
derives 80 per cent of revenues from personal computers, foresees a repeat of

that pattern this year. "In terms of our capacity planning, that's what we

are planning for," Otellini said.

Record sales of microprocessors, the brains of PCs, during the fourth quarter

of 2001 showed things improving, he said. "That was very comforting to see

that level of volume after the abysmal first half of last year," Otellini

said. "A lot of that cycle of inventory over-correction seems to have

burned off. People are buying computers again."

Besides seasonal factors, he said he expects market share expansion and the

introduction of up to 4,000 new products to drive growth for Intel this year.

Malaysia is one of Intel's main manufacturing centers, with a combined workforce

of about 8,000 working in a testing and assembly plant in Penang and a

motherboard manufacturing facility in northern Kedah state.

Intel plans to hire about 600 workers this year to boost its research and

development and design activities in Malaysia. A series of pull-outs by

manufacturers from Malaysia for cheaper centers like China have raised concerns

about the country's ability to attract foreign technology investment.

Otellini said he was happy with the reliable infrastructure, tax incentives

and ample skilled labour Malaysia offers. "Much of it is going well in

Malaysia and that's why we've been here and that's why we'll continue to stay

here," he said.