Sat, Nov 20, 2004 - Page 11 News List

No oversupply, says Intel

STEADY OUTLOOK Dismissing media and analysts' gloomy reports, the chip firm's CEO said future demand would come from health care and Wi-Max applications

AP , Bangalore, India

Intel Corp. chief executive officer Craig Barrett, and National Association of Software and Service Companies President Kiran Karnik at a forum in Bangalore yesterday.

PHOTO: AP

Intel Corp's chief executive yesterday said the world's largest computer chip company was not suffering from overcapacity and asserted that new areas were emerging to increase global demand for microprocessors.

"We build our capacity based on the long-term growth outlook for the industry," Craig Barrett told business leaders on the second day of his visit to India, where Intel employs 2,400 people.

"We have to invest for the future ... We have a multiyear outlook," he said in the southern Indian technology hub of Bangalore, the capital of Karnataka state.

Barrett defended Intel's continued expansion of production capacities and high levels of inventory that have outstripped current levels of sales.

Intel currently sustains inventory worth nearly US$3.18 billion, sparking fears that it might have to cut inventories or offer discounts to computer companies to liquidate stocks.

However, Barrett maintains the market has enough appetite to tide over seasonal imbalances in demand and supply. "Capacity and demand are in balance for about one microsecond every three years," he said.

"The popular press and financial analysts often tell us to do the wrong thing ... They typically have a one-day outlook," he said.

He said at least two areas promise to increase demand for chips in the near future -- computing in health care and an emerging wireless communication standard called Wi-Max.

"I would say medical sciences are the next big opportunity for Intel," Barrett said.

He said an increased use of computers to study patterns of an individual's genes to provide more accurate treatment would drive the sales of chips in the coming years.

Barrett said Intel would launch its first chips based on the Wi-Max standard next year.

Wi-Max, called the 802.16 standard in technical parlance, is an extension of the increasingly popular Wi-Fi, or 802.11 wireless standard. Equipment made with the new standard will have the potential to communicate over a range of up to 50km. No company offers products in the Wi-Max standard yet.

With Wi-Max, "we will offer our customers competitive advantage over some of the competing technologies ... such as cable and TV," Barrett said.

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