SAN FRANCISCO -- Manufacturing efficiencies gained from the transition to 300-mm wafers have allowed Intel Corp. to cut its capital spending budget in half from two years ago, to just $3.7 billion in 2003. But don't expect similar cuts in research and development.
Addressing analysts' concerns that Intel has spent too much money in areas that haven't lived up to their potential, a company executive today responded that, while Intel is cutting some programs, R&D is sacred.
"It's important to make sure we have the right products at the right time when the market turns around," said Leslie Culbertson, vice president of finance for the Santa Clara, Calif.-based chip maker, speaking at the Thomas Weisel Partners Tech2003 conference here. "We can't afford to miss a generation."
Intel, which plans to invest $4 billion this year in R&D, has reduced its spending by 20% since 2000 by exiting non-silicon product lines that were not generating a profit. The company shut down nine of these in 2001, and seven last year, she said.
"We still have some smaller things we can trim some more. We're constantly looking at the communications area to make sure we have the right investments there," she said.
Intel's recently announced Centrino platform is one way the company plans to combine communications with its strength in computing to address demand for wireless mobililty.
Centrino centers on a microprocessor designed for mobile applications, a chipset optimized for the processor, and 802.11 wireless networking capability. The first example of Centrino products will come to market in March in the form of a PC, Culbertson said.
Intel is betting on 802.11 as a technology that will help drive the next wave of consumer spending on PCs, though corporate IT spending remains elusive.
"I do believe it's time for an upgrade cycle, with the down economy and an aging installed base," she said. "Some companies are finding it's cheaper to upgrade than to continue maintaining their existing PC bases."
Intel is doing its part. It's planning to upgrade 35,000 PCs across the company this year.