Aug 26, 2003 (09:08 AM EDT)
Intel CEO Won't Predict IT Recovery Yet

Read the Original Article at InformationWeek

PENANG, Malaysia (AP) -- Intel Corp.'s Craig Barrett said Tuesday it is too early to predict a recovery in the information technology sector, even though his company has just raised its forecast for third-quarter sales.

"We're seeing strong seasonal strength in all geographies across the board," the chief executive of the world's largest computer chip maker said Tuesday during a visit to an Intel manufacturing plant in Malaysia. "But we're not sure ... if that signifies some start to a recovery."

"We're going to be very conservative in our forecasting, so we're not forecasting a recovery in the IT sector yet," Barrett told reporters in northern Penang state.

As supplier of central processors to around 80 percent of the world's personal computers, the Santa Clara, Calif.-based semiconductor giant generally has a good idea about the state of the PC market.

In a sign that demand for personal computers was gaining strength, Intel on Friday raised its third-quarter sales forecast to between $7.3 billion and $7.8 billion, compared with its earlier forecast of $6.9 billion and $7.5 billion.

Analysts differed on whether the announcement represented merely a stronger-than-usual back-to-school season or if it signaled the start of a long-awaited upgrade cycle in which companies and consumers replace older machines with new ones.

Barrett said it would "take a couple of quarters of above-average growth first to forecast a resurgence in the IT sector.

"We're just saying we'll look at it one quarter at a time," Barrett told reporters. "None of you (should) write that I said the IT sector is recovering, because I didn't say that."

Barrett was speaking after opening a new center in Penang to design and develop technology for Intel's products worldwide. The center is part of a 152 million ringgit ($40 million) investment by the company to expand its operations in Malaysia.

Barrett said Intel will invest $100 million annually in research and development in Malaysia--the equivalent of 2.5 percent of the company's global investment in research and development annually.

The annual investment, which comes on top of spending for the new center, is likely to rise, he said.

"Malaysia's readily available infrastructure, high-volume manufacturing capabilities, skilled work force and strong government support for information technology innovation make it an ideal location for our new center," Barrett said.

Intel operates another manufacturing plant in Penang's neighboring state of Kedah. It also has a software development center at Cyberjaya--Malaysia's version of Silicon Valley in California--near the administrative capital of Putrajaya.

Intel has been active in this Southeast Asian country for 31 years and has invested $2.3 billion here in that period. Intel employs around 8,000 people in Malaysia.