Intel Inches Out Slight Income Increase in Q3

In the first in a series of quarterly reports about Intel Corp. (Santa Clara, Calif.), we have found that, while the semiconductor industry still struggles to recover from the industry's worst downturn and manage a significant increase in capacity, Intel has stabilized net income and inched out a slight increase in net income in the third quarter of the year at $1.9B. For the year, we project that Intel is on track to produce a net income and revenues just shy of the record levels achieved in 2000 (Figure ). Inventories, a major concern to Intel and the market, stayed relatively flat in Q3, but remain at record high levels.

However, although not indicating the change as a schedule slip, Intel did quietly push out manufacturing on 65 nm, the next-generation process technology, until 2006. In-Stat/MDR's Jim McGregor believes that challenging industry conditions and scheduling could push this out until mid-2006 or later. In Q3, Intel did not indicate any other changes to its manufacturing plan.

In-Stat/MDR's quarterly report also finds that:

• Intel announced 10 new microprocessors in the Q3 timeframe, including three new server processors, one new desktop processor and six new mobile processors.
• Intel's product strategy remained relatively constant from Q2 with an emphasis on dual-core processors for the future.
• The future of server processors for Intel remains uncertain as dual-core EM64T Xeon solutions as well as the power and thermal limitations of the Itanium will squeeze the market for Itanium processors, limiting them to only ultra-compute-intensive applications.
• The communications strategy and platforms will become the major focus for Intel in the long term. The communications group has not produced an annual profit to date, but will generate close to $5B in revenues in 2004.
• On the competitive front, Advanced Micro Devices (AMD, Sunnyvale, Calif.) continues to provide significant competition in desktop and server processors.

The report, "Intel Q3 Review: Business and Technology Review," is a quarterly review of Intel's business performance. The report provides status and analysis of Intel's financial performance, microprocessor shipments, competitive positioning, and a short- to mid-term outlook. In addition, the report provides updates on new products and changes in product roadmaps and strategic focus. This is the first in a series of reports that will be provided on a quarterly basis. For more information, please visit www.instat.com/catalog/Scatalogue.asp?ID=86 or contact Courtney McEuen at 1-480-483-4454; cmceuen@reedbusiness.com.