TAIPEI " Casting a vote of confidence in Taiwan's drive to move up the electronics food chain, Intel Corp. CEO Craig Barrett said Monday his company will set up a high-level R&D center in Taipei for system innovation. It will be the first of its kind in Asia for Intel.
During his first stop on an Asian tour that will also take him to Malaysia, China and Korea, the head of the world's largest chipmaker was full of kudos for Taiwan's in-process transition from an electronics manufacturer to an architect of system design.
However, he was more somber about the immediate outlook of the PC industry, the island's electronics mainstay.
Last week, Intel raised its third quarter revenue guidance to between $7.3 billion and $7.8 billion -- up from its earlier forecast of $6.9 billion to $7.5 billion. The company cited stronger consumer demand as well as increasing sales in Asia's emerging economies, particularly China.
Yet with few signs of businesses spending IT dollars on upgrades or expansions, Barrett remained cautious. "I'd like to say that on the basis of heavy investment in R&D that we've made and the strong product line that we have, that we're not only doing well in the marketplace but doing well against the competition. That's what I'd like to say," he said.
Instead, he showed the same reticence that many tech CEOs have exhibited lately. Still unsure as to whether this recovery is real or a replay of last year's first-half false start, Barrett acknowledged, "It's too early to suggest a total turnaround."
Asia's growing influence
One of the purposes of Barrett's Asia trip is to highlight the importance of the Asian emerging economies to Intel's future, not only in manufacturing and system design but also for consumption. For instance, China is Intel's largest growth market; Malaysia is still a test and packaging outlet; Korea's expertise in communications infrastructure and system design is attractive; and Taiwan remains a high-level PC system design hub and is expanding into communications and consumer system design -- all places where Barrett would like to see "Intel Inside."
The natural migration of labor intensive and low margin industries to China is eroding what has traditionally been the base of Taiwan's IT industry, spurring a lot of hand wringing by government officials and pledges of a new round of investment targeted at maintaining Taiwan's position as a global IT player.
During the past few years, there have been several examples that show Taiwan is trying to shirk its reputation as a copycat. Yet the overwhelming majority of tech firms here remain "fast followers."
Still, Barrett pointed to Taiwan's preeminent role as a PC system designer as proof that the island is making quantifiable progress. "Five years ago, you have been hard pressed to find computer system design here in Taiwan. Today, you are hard pressed to find it anywhere else but in Taiwan," he said.
He also noted that island's fast turnaround of IEEE 802.11x standards into low-cost products that are spurring more widespread adoption of wireless LANs. Such developments, Barrett said, prove that the island is evolving from simple electronics manufacturing. "This transition is happening," he said.
Barrett used the inauguration of the "Intel Innovation Center" here to support the island's much hoped for rebirth as a regional R&D hub. Barrett said Intel will employ 25 "scientists" that will work with local universities and businesses to turn basic ideas into products.
Barrett declined to say how much Intel will spend on the venture, but he did indicate that the company hopes to increase staffing to 50 or 60 scientists within a few years.