Chip giant Intel has briefed a clutch of Wall Street analysts in a bid to reassure the markets that it is still on course for good times ahead.
It confirmed some details of its future roadmap and reiterated its belief in the Celeron low end processor, which has so far met with lukewarm response from PC makers. But it also admitted it had overstocks of microprocessors.
Sean Maloney, US vice president of sales and marketing, claimed that overstocks would be offset by sales of chips into the burgeoning Indian and Chinese markets. Intel was also introducing better technology to manage stocks, he said (see separate story).
Craig Barrett, Intel's president, outlined details of the Katmai chip, out next year, and said it would run at an estimated 500MHz. He also said that future versions of its Celeron processor would run at speeds of 333MHz.
Barrett admitted that Intel has plans to integrate further functions that are currently performed in software on to the silicon. He did not give specifics, but observers believe this could turn up the heat of the antitrust probes against Intel and so backfire in business terms.
For the first time, Intel executives also gave figures for the size of the entry level, sub-$1,500 market targeted by Celeron, which it estimates to be worth around 27 per cent of the US market, but less overseas.
However, this may be a sector that Intel finds it hard to dominate. Its business model requires that it make large margins on its processors to continue its R&D efforts and build or upgrade expensive fabrication plants. And its clonemaking rivals, AMD and Cyrix, have at last seen a market where they can steal a march on the giant and compete on price.
Dana Krelle, a senior executive at AMD, has claimed that Intel cannot make money by fighting in the increasingly popular entry level market, and some analysts agree. Both AMD and Cyrix have said in recent weeks that they will fight at the entry level, and hope to make considerable inroads with their Socket Seven solutions, which use an ageing but low cost architecture that Intel is moving away from.
Intel turned in a 36 per cent profit drop in its first quarter two weeks ago, and said it would make five per cent of its workforce redundant, causing intense nervousness among investors who generally see the chipmaker as a safe stock. After the briefing, Intel's share price rose by nearly $2.50 on Wall Street.
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