Intel banks on 32nm to beat recession

Intel chief Paul Otellini insisted that the company will not cut back on R&D

Intel is betting on new technology to spur the market after reporting a whopping 90 per cent drop in profits in the fourth quarter of 2008.

Chief executive Paul Otellini told reporters that the company will not be cutting back on R&D spending, and will continue to invest in new developments. Intel intends to bring its 32nm production facilities online in the second half of this year.

"The best way to beat a recession is with new products rather than sticking with the old," he said.

"We are on track for 32nm production in the second half of 2009 and will not slow its introduction at all. We believe it will increase our product lead, lower costs and lead to whole ranges of new designs, especially on-chip products."

Intel reported profits of $234m (£156m) for the last three months of 2008, 90 per cent lower than the same period a year ago. Profits for the year were down 24 per cent at $5.3bn (£3.5bn).

The company said in November that it expected a profits shortfall and the market was expecting bad news, but the size of the fall has surprised many.

Intel said that it could not make a precise revenue prediction for the first quarter of 2009 owing to economic uncertainties, but expected to make around $7bn.

The company said that the PC segment had mostly reacted quickly to changing market circumstances since most PCs were built to order, but that the laptop segment had been slower to react, in part because of higher fuel prices earlier in the year.

Laptop manufacturers had taken to shipping products via boat rather than air, making it less easy to react to sudden changes in the market.