Intel sees flat market

By Steve Malone

Posted on 16 Jul 2003 at 10:56

Chip giant Intel saw its net income more than double in the Q2 2003 compared to the equivalent quarter in 2002 when the IT market was approaching rock bottom. The company has announced profits of $896 million compared to $446 million in 2002. Much of the increased profit compared to the 2002 figures were due to last year's write downs of areas like online services totalling $218 million.

Net revenue from Q2 is up to $6.8 billion from $6.7 billion in Q1. Intel says revenues for its key product areas in microprocessors and chipsets were essentially flat for the quarter as average prices and volumes remained stable from the previous quarter.

Intel is now expecting to spend more on R&D in 2003 than it originally planned. The move to 65-nm processes from 90-nm is now expected to be around $4.2 billion compared to $4.0 billion.
However overall the company is remaining cautious over the global economy and says third quarter revenues will be between $6.9 billion and $7.5 billion.

The company is pointing to the new generation of hyperthreading enabled Pentium processors, Centrino systems and the emerging 65-nm processes to drive revenues forward in the future. Certainly revenues from the cash cow of microprocessors rose slightly to $5.8 billion from $5.7 billion from the previous quarter although costs resulted in a fall in operating profits to $1.8 billion from $1.9 billion.

The Wireless Communications Group losses, which includes product lines such as flash memory, application processors and cellular baseband chipsets for cellular handsets and handheld devices increased to $123 million for the quarter compared with $98 million in 2002 reflecting perhaps the fact that mobile phones and PDAs remain in the doldrums worldwide.