Intel also said it would use the slowdown in the worldwide semiconductor market to accelerate its transition from the Pentium III microprocessor line to its new Pentium 4 chip in 2001--in an apparent effort to fend off competition from its main rival: Advanced Micro Devices Inc.

The moves follow a disappointing quarter for Intel. Today, in fact, the company warned investors that it expects a 15% decline in first quarter revenue from $8.7 billion in sales recorded in the fourth quarter of 2000. The company blamed seasonal factors and the impact of slowing worldwide economies on the sequential drop in revenues in the current quarter.

It also today reported a net income of $2.2 billion in the fourth quarter of 2000 on revenues of $8.7 billion. Including acquisition-related costs, Intel's fourth-quarter net income was $2.6 billion (see today's story).

As a result of a slowdown in its business, Intel has implemented several measures to reduce costs. It plans to phase out a PCB plant in Puerto Rico by mid-2001--a move that could impact some 1,360 employees in that location.

It will also curtail all hiring and expansion in terms of office space. "Containing spending is a priority for Intel in 2001," said Andy Bryant, senior vice president and chief financial officer, in the conference call.

During the conference call, Intel officials painted a mixed picture about overall outlook in the worldwide IC, PC, and related markets.

"Overall, our Q4 meet our expectations as flat," said Paul Otellini, executive vice president and general manager of the Intel Architecture Group, during the conference call. "Assuming the economic situation improves, we should see the market rebound in the second half," he said.

On the bright side, the company intends to expand its capacity, research and development spending, and product development in order to prepare for the eventual upturn in the business.

"Our plan is to use the downturn to make a faster transition to the Pentium 4," Otellini said.

Rolled out late last year by Intel, the Pentium 4 is being positioned as the company's flagship processor line, replacing its bread-and-butter Pentium III chip over time.

Intel also hopes to sell the Pentium 4 chip in the mainstream PC markets by early-2002--or sooner. At present, the Pentium 4, which is offered at 1.3-, 1.4-, and 1.5-GHz clock rates, is geared for the low-end workstation markets.

"We would like accelerate the transition of the Pentium 4 to the mainstream PC market to the calendar year of 2001," he said.

A key to that transition is Brookdale, a PC chip set that supports SDRAM. At present, the current chip set for the Pentium 4 only supports Rambus Inc.'s high-speed memory interface.

Intel will roll out Brookdale in the second half of this year, he added.