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Intel CEO comments on Nvidia, economy, flash

At a tech conference, Paul Otellini talks about competition with Nvidia, the economy, and the possible fate of its flash memory business.

Intel CEO Paul Otellini commented on competition with Nvidia, the economy, and the possible fate of its flash memory factories on Wednesday at a tech conference in San Francisco.

Otellini began by speaking to the fact that the global economic downturn has depleted inventories of chips. "I don't think there's much inventory out there. It's hard to imagine that there's a significant drop below this." He made his remarks at the Goldman Sachs Technology and Internet Conference 2009, which was streamed live.

Intel CEO Paul Otellini
Intel CEO Paul Otellini Intel

And moving quickly to the next generation of chip technology is critical to get Intel through the downturn. "One of the reasons you saw us be so bold as to make an announcement on 32-nanometer (manufacturing technology) two weeks ago is that we are quite confident in the benefit of the technology. It will lower our cost. We'll have a lower cost structure by moving our product line to the technology. That gives us comfort and will allow us to do well when the market recovers."

Otellini said that Nvidia is not in a strong competitive position. "If you don't have a microprocessor, what else do you have to sell?" he said, countering Nvidia's claims that the industry is becoming more centered on graphics chips. "The graphics subsystem for most machines will be subsumed into the microprocessor. So what Nvidia is doing is making an argument to defend the status quo," he said. He said if you want higher performance you can buy a discrete graphics chip. "You can buy it from them or you can buy it from us," he said, referring to Intel's upcoming Larrabee graphics chip.

And what about Intel's flash memory strategy? "It may not be essential for us to have our own NAND factories to build (flash memory). We could probably specify the product that we want and buy it from third parties," he said.

Speaking about Atom he said the "shortest time to money" is Atom in the embedded market place. As Intel moves to a system-on-chip (SOC) design it will become more profitable. "With north of a billion-dollar business there, that should triple in the next few years," he said. Embedded chips are used in cars, consumer electronics, and industrial applications, among other areas.

About Netbooks he said: "We lit a fuse. It's the only bright spot in the PC industry at this point in time." But he added: "Atom is still less than half the performance of our entry-level Celeron product. It wasn't designed to be a notebook replacement part." He added the Microsoft will limit the starter edition of Windows 7--that will be used for future Netbooks--to three applications running at once. "You'll be underwhelmed," he said, relative to mainstream notebooks

He also addressed smartphones and the future Moorestown Atom chip. "You saw some announcements last week with LG (Electronics). You'll see some announcements in the next month or so from some other major handset manufacturers. Watch that space." He also added that Intel, with its 32-nanometer technology, is trying to move from the MID (mobile Internet device) design to true smartphones. "System-on-chip allows us to get down to a single we can get the MID form factor--which is sort of an ultra-mobile PC-- into the mobile handset form factor. That's critical for us."