Chipmaker Intel Corp CEO Paul Otellini vowed to shore up the company's defenses against steep drops in memory chip prices that forced it to lower its profit forecast for the current quarter.
Price erosion for NAND flash memory has been much steeper in the first quarter than Intel had expected, Otellini said on Wednesday.
Otellini, speaking at an investor conference at the company's Santa Clara headquarters, said the company plans to move aggressively this year into new markets to better insulate itself against plunging prices for a type of memory called NAND flash. One new market for NAND flash memory is solid-state computer drives, which store data on memory chips instead of spinning disks.
PHOTO: AFP
Despite the memory-market woes, Otellini says Intel's core computing business is firing on all cylinders. Otellini said Intel is making rapid progress in shipping chips based on a new chip-making process.
Intel is also re-evaluating how quickly it wants to increase its investment in NAND flash, Otellini said. Intel started making NAND flash in 2006 under a joint venture with Micron Technology Inc.
"This business will not be a drag on Intel Corporation," Otellini said. "We're going to fix it, or we're going to make sure it's profitable, one way or another."
Intel's primary business is making microprocessing chips, the brains of personal computers. But its memory chips are widely used in portable electronics like digital cameras and MP3 players.
Prices for computer memory have been under intense pressure because of oversupply and fierce competition. Intel had forecast a 27 percent price drop for NAND flash in the first quarter, but prices have fallen 53 percent, leading Intel to revise its profit forecast this week.
"Pricing has moved very rapidly, much more so than we thought," Otellini said.
Intel now expects a gross profit margin of 54 percent of revenues, plus or minus a percentage point, in the first quarter, which ends in March. That is down from its previous forecast of 56 percent, plus or minus a couple percentage points.
Gross margin is an important measure of profitability. It shows how much money a company made on each dollar of revenue, once manufacturing costs are stripped out.
Intel has sold 4 million processors built with equipment that shrinks the average width of their circuitry to 45 nanometers, or 45 billionths of a meter. The smaller a chip's circuitry, the more transistors can be squeezed onto it and the better it can perform.
Intel began selling these new, more efficient chips in November, jumping to a big lead over its smaller rival in the microprocessor market, Sunnyvale-based Advanced Micro Devices Inc.
But AMD announced this week that it is on track with its own 45-nanometer technology and plans to ship similar chips to manufacturers this year.
AMD this week also announced a new chipset that promises to improve the ability of personal computers to play high-definition videos and play graphics-intensive games without expensive add-on cards.
The chipset is part of AMD's push to challenge Intel on the graphics capabilities of its chips, an area where AMD has made a US$5.6 billion bet in the form of its acquisition of graphics chip maker ATI Technologies Inc.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat