SANTA CLARA, Calif. -- Intel Corp. today 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 world's largest chip supplier blamed seasonal factors and the impact of slowing worldwide economies on the sequential drop in revenues in the current quarter.

Intel 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.

Slowing economic conditions "impacted fourth-quarter growth and are causing near-term uncertainty," said Craig R. Barrett, president and chief executive officer. Intel's fourth-quarter revenue was flat with the company's $8.7 billion sales in third quarter. The company's net income in Q4 of 2000 was sequentially down by 13% from the prior three-month period.

Despite the near-term uncertainty, Intel said it was preparing to increase capital spending by nearly 12% to $7.5 billion in 2001 compared to $6.7 billion in 2000. The company is also planning to boost R&D spending 10.3% to $4.3 billion this year vs. $3.9 billion in 2000.

Barrett said Intel is increasing its capital spending and R&D budget to accelerate the company's move to 0.13-micron processes and 300-mm diameter wafers. Also during 2000, Intel acquired 16 companies and businesses for more than $2.7 billion with most of the mergers aimed at expanding its networking, communications, and wireless businesses.

Intel said it expects to reduce the cost of microprocessor production by 30% in 2002 and beyond as a result of 300-mm (12-inch) wafers.

But the Santa Clara-based chip giant does expect to have a sluggish start to 2001. Based on its current projection, Intel's revenue in the first three months of 2001 will be 7.5% less than $8.0 billion reported in Q1 of 2000.

Intel predicted a gross margin percentage of 58% in the first quarter of 2001--plus or minus a couple of points--down from 63% in the fourth quarter of 2000.

The year 2000 was a record year for Intel in terms of revenue and net income. The company posted $33.7 billion in sales and a net income of 10.5 billion for the entire year, excluding acquisition costs. Revenue in 2000 was up 15% from 29.4 billion in 1999 and earnings increased 44% from $7.3 billion last year.