Servers, Wireless Keep Intel in the Chips

Intel found its growth groove in its Pentium and
Xeon businesses as part of its Q3 earnings report, the company said
today.

The Santa Clara, Calif.-based chip making giant said its
third-quarter revenue of $8.5 billion and net income of $1.9 billion
were made possible by record server and mobile microprocessor shipments
and gains in its Flash memory business. The company also reported
earnings per share of 30 cents, which is a penny less than what
financial analysts were predicting, but good overall considering the
company downgraded its own numbers last month.

“Growth was not as high as we originally anticipated due to inventory
adjustments at some of our major customers and lower-than-expected
overall demand for PCs,” Intel CEO Craig Barrett said in a statement.

Recent numbers from the Semiconductor Industry Association (SIA) show
chipmakers like Intel acted quickly to reduce inventory levels between
July and September. Capital spending is currently around 23 percent of
sales, which is now in line with historical patterns, according to the
SIA.

While Intel said that sales of its microprocessor units were higher
and set a third-quarter record, the average selling price was
approximately flat. The company also said that its chipset units,
motherboards and wireless connectivity units set a record.

In the course of the last three months, Intel introduced four new
low-voltage and ultra-low-voltage Pentium M processors and Celeron M
processors.

The company said its progress in the enterprise segment was
highlighted by its new dual-processor Xeon platform, but did break out
separate sales figures from its single core workhorse. The newer chips
support faster DDR2 memory, high-bandwidth PCI Express interconnect
technology, Demand Based Switching for power reduction, and Intel EM64T
technology for working with very large data sets.

And even though it has been less than excited
about its current Itanium sales record, Intel is
looking ahead to its next-generation Itanium processor, code-named
Montecito, which will have 1.7 billion transistors, each allowing for
multiple CPU cores and 24 megabytes of cache memory.

In wireless, Intel said it shipped a record number of Wi-Fi
connections and delivered the first samples of a product code-named
Rosedale, a system-on-a-chip solution for WiMAX wireless broadband
equipment for homes and businesses. In addition, Intel, NEC, Texas
Instruments and Wisair demonstrated forthcoming Wireless USB and
ultra-wideband technologies.

Intel also noted that it has completely crossed over to 90-nanometer
technology in microprocessor shipments from its previous 1.3 micron
production. The company also reiterated its plans to have its 65-nm
manufacturing technology process ready in 2005 with the majority of its
shipments coming in 2006.

In another notable spot on the sales front, Intel reached a sales
milestone this quarter by shipping more than 50 million desktop, server
and mobile processors with its Hyper-Threading (HT) technology.
Introduced last year, the technology boasts a boost in performance as
much as 25 percent when combined with its enabled chipset, BIOS,
operating system and application software.

HT is part of a family of Intel technologies it refers to as its “T
family.” The technologies, which include Intel’s 64-bit extensions
(EM64T), will also be joined in 2006 with Intel’s LaGrande Technology
(Security, LT) and Vanderpool and Silvervale Technology (Virtualization,
VT/ST) to coordinate with Microsoft’s
next-generation Windows OS named Longhorn.

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