Intel: We've Recovered From Missteps

Intel Corp. (INTC) will miss its 2004 product cost reduction targets because of a widely publicized string of product delays and problems, but those missteps are largely behind it now, the world's largest chip maker said on Tuesday.

"We have recovered from those missteps and the machine is firing on all eight cylinders in terms of new product introductions," Intel Chief Executive Craig Barrett (search) told analysts in a New York meeting monitored via a Web cast.

Intel President Paul Otellini (search), who is designated to succeed Barrett, said the company will not meet its goal of reducing microprocessor unit costs by 15 percent this year, due to "ups and downs" at Intel. But he added that unit costs will fall by 20 percent between 2003 and 2006, even as Intel introduces more powerful features into its chips.

Facing Wall Street analysts who have been wary of Intel stock this year, the chip maker's two top executives highlighted the company's international brand position and manufacturing strength.

"Intel fundamentally is a manufacturing company," said Barrett, who is scheduled to step down as CEO in May. "It's what's made us number one in the industry for the last decade and we continue to make investments in this space."

With more advanced factories and a bigger research budget than any other chip maker, Intel is now developing manufacturing technology to be used in products as far out as 2011, Barrett said. The company is also increasingly focusing on the power consumption of its chips.

The executives also emphasized its money-losing communications business was seeing increased opportunities in cellular telephones, handheld computers and notebook personal computers. By 2006, third-generation cellular technology and a long-range wireless system called WiMAX will be included as options in many Intel-based notebook computers, they said.

Intel shares rose 4 cents, or less than 1 percent, to $24.05 on Nasdaq at midday.

While canceling projects like a chip for televisions and a higher-speed version of its Pentium 4 (search) microprocessor, Intel has added extra resources to introduce a chip-making technology called dual-core that boosts the power of computers to churn through multiple tasks at the same time.

Those plans for dual-core chips, which have the equivalent of two microprocessors in a single silicon chip, are on track and even ahead of targets in some areas, the company said. Intel's much smaller rival, Advanced Micro Devices Inc. (AMD) has similar plans for dual-core processors.

By 2006, more than 70 percent of its desktop computer processors will have two cores, up from a previous projection of 40 percent, Otellini said. Dual core chips are on track to be introduced in mobile, desktop, and server products next year, he added.