Intel stays the course on capital investments

Regardless of the slump in the semiconductor industry and the anticipated

impact of the terrorist attacks on the US and global economies, Intel remains

determined to stay the course with its plans to invest $7.5 billion in capital

expenditures this year. Intel also announced a move into the contract

manufacturing market where it now offers a one-stop shop for customers who

develop product around Intel chips.

"We're on track for the forecast we made earlier this year," said

Intel spokesman Chuck Mulloy commenting on the company's capital expenditure

plans for the remainder of fiscal 2001.

As part of the budget, Intel will spend $300 million to improve and expand

its assembly and testing plant in Shanghai, China. The money will be spend to

improve the validation, testing and assembly for the new Intel 845 Pentium 4

chipset. The plant was set up in 1998 to assemble and test flash chips at a cost

of $198 million.

Intel's announcement that it will not cut into its investment program comes

as welcome relief to the chip equipment industry, which has seen new orders drop

in half this year. It also sends an important sign to the rest of the industry

that Intel continues to see long-terms strength in demand for its processors and

memory chips, which have traditionally driven worldwide demand for ICs.

Intel also announced this week an important move into the contract chip

manufacturing business with the newly formed Intel Microelectronics Services

group (IMS).

IMS has negotiated contracts with Taiwan Semiconductor Manufacturing Co. (TSMC)

and others that will produce chips IMS customers designed with Intel's

assistance. Intel is targeting companies designing new products designed around

Intel microprocessors and other components. IMS offers these companies a

one-stop shop, from design to manufacturing and thus help companies bring their

products to market faster.

IMS was started a year ago but not formally announced up until now. It allows

companies submit a design and receive finished products within months.

"Basically, what we're trying to do is give our customers the flexibility

to choose the process that best suits their plans," said Intel spokesman

Manny Vara.