Intel Corp's chief executive said yesterday that the outlook for the PC industry in the second quarter will be relatively flat, as no substantial growth in corporate spending for information-technology infrastructure is taking place.
Despite relatively strong GDP growth in the US during the first quarter, "As far as I can tell, that hasn't translated into corporate profitability or corporate IT investment this year," Intel CEO Craig Barrett said.
Last month, the US reported a spectacular recovery in the first quarter, growing at a 5.8 percent year-on-year.
While there is some strong spending going on in emerging economies such as China, Latin America and Eastern Europe, Barrett said he doesn't expect a strong pick up in the industry because corporate investments in the US, Western Europe and Japan remain weak.
"I wish I had better news," he said.
While Taiwan's four-month drought has raised concern among local chipmakers that cuts in production may be necessary, Intel will not curb orders placed to Taiwanese companies, Barrett said.
``I don't think reducing orders is really an option. At this time, as most companies around the world are specialized in such products, it's not possible to re-distribute orders to other places,''he said.
"It will be very difficult to see a reduction in output. Probably it will have an impact on the industry as a whole," Barrett said yesterday at a press conference following a keynote speech on innovation and education.
During the speech, Barrett also announced Intel's partnership with National Tsing Hua University to establish a wireless communications laboratory. The lab is expected to be operational by the third quarter and will help cultivate local talent in wireless communications, he said.
Addressing more than 300 listeners in Taipei, Barrett said Taiwan's leaders need to design the country's future through innovation.
"Taiwan is in the process of transforming itself from a powerful position of manufacturing electronics and high-tech goods to that of more innovation, design and creation of high-tech goods and services."
The future of Taiwan depends on its workforce, which must be well educated in technology and able to develop new ideas, Barrett said.
"There is a great disparity between jobs in the future and the education that we provide to our workforce in the future. Clearly, 60 percent of the jobs going forward require some information technology background, some capability to use computers and communications equipment, and some capability to add value to that information technology, but only about 20 percent of people graduating from schools today have that capability," he said, citing recent studies.
A similar transition took place in the US about 10 or 15 years ago, he said, when manufacturing started to move out of the US to places such as Taiwan, Malaysia, Thailand and Mexico.
"There was a discussion in the US about the hollowing out of America and what it would do to the economic infrastructure of the America. But the issue here is not that you can stop the transition from taking place, but an issue of how do you take advantage of that natural movement when it occurs," he said.
As Taiwan's manufacturing becomes mature and jobs gradually shift to lower-cost regions, Taiwan needs to concentrate on education.
"The educational quality is really related to what's going on in the competitiveness of Taiwan in the future. Education will drive innovation," Barrett said.
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