Intel looks to spread silicon "everywhere"

"Our goal is to drive Intel everywhere into the home," as well as the office and mobile environment, said Paul Otellini, Intel's president, who was speaking at the Santa Clara, Calif.-based chipmaker's fall financial briefing to investors. "We want to drive more Intel silicon into every computer."

Business remains down, but the potential to expand still exists, executives said. While PCs will consume most of Intel's chips, the company's silicon will increasingly pop up in set-top boxes, personal video recorders, handheld devices and networking equipment, he said.

Integration and bundling--tools the company has used for years to expand into new markets--will be pervasive. Intel said, for instance, it will sell its upcoming Banias notebook chip with a complementary chipset and with its first Wi-Fi chip. The whole package will be sold under a single brand name and allow Intel to sell three chips at once.

Manitoba--a chip for handheld devices coming in the second half of 2003--will combine flash memory, a microprocessor and communications functions into one piece of silicon. Because integrated chips cost less than separate chips, Intel believes it can undercut competitors as well as sell a larger percentage of the total silicon.

Processor performance will also improve, the company said. Madison, the next version of the Itanium server chip, is due out in 2003. It is expected to contain close to a half a billion transistors and provide 30 to 50 percent more performance than the current Itanium 2. As an added bonus, it will fit inside current Itanium 2 servers.

"Customers can take that same design and get substantially higher performance," Otellini said.

Around the world
In terms of geographic regions, Intel said it will continue to expand its reach in emerging markets such as Russia, China, Brazil, India and Mexico, where PC growth is strongest. Those five countries, in fact, account for 17 percent of Intel's sales today, said Mike Splinter, executive vice president of sales and marketing.

To reach these international markets, the company will need to create stronger relationships with dealers and system integrators, which wield substantial power in those markets. Currently, the company works with around 90,000 integrators, including 3,000 in Russia alone. Within five years, Intel expects the number to expand to 200,000.

Meanwhile, in the United States the company said it will continue its push to take share in the server market with Xeon- and Itanium-based servers. The company said it met its internal goal for Intel-based server sales into the 1,000 largest global companies.

Revenue remains fairly flat. In this environment, the company will continue to cut costs, said CFO Andy Bryant. Since the company's employment peak in the first quarter of 2001, total employee count is down 13 percent.

Among other notes
• A 3GHz Pentium 4 will come out this quarter, Otellini said. Sources said it would launch Nov. 14.

• Prescott, the successor to the current version of the Pentium 4, is expected to feature a new version of hyperthreading, called HT2, while an accompanying chipset will come with a security technology called LaGrande that prevents outsiders from looking at data on a hard drive. Prescott is due in the second half of 2003.

• Intel plans to integrate "soft access points" for wireless access into PCs. This extra software will let home notebook users connect to the Internet by using a wired home PC as a bridge. This technology could help expand wireless home networking, Otellini said.

• A 2GHz Xeon for multiprocessor servers is due later this quarter.

• Itanium will contain multiple cores, or processing units, Otellini said. Next year, three operating systems, a number of applications and virtually all of the major databases will be running on Itanium.