Intel Expects Industry Recovery in Early 2003

Intel Corp., the world’s largest chip maker, expects a recovery in the computer industry in early 2003 after an improvement in the economy, Chief Executive Craig Barrett said Sunday.

The recovery in the computer industry will come before a rebound in the telecommunications business, in which there has been too much investment based on unmet expectations, Barrett said at the European Technology Roundtable Exhibition conference in Seville.

“I expect the computer sector to recover in the early part of 2003,” Barrett said. “For the communications sector, I don’t think you are going to see much recovery until the end of 2003 or 2004.”

Chip sales plunged by a third last year, the industry’s steepest-ever slump. Intel and rival Advanced Micro Devices Inc. have been trying to shore up demand for PCs with faster products and price cuts. Orders haven’t recovered, and some analysts have said demand won’t come back until 2003. Intel last month chopped $200 million off its third-quarter sales forecast.

New technologies such as wireless solutions and increased data-transmission needs by users will restore growth, Barrett said.

“Never been more optimistic about the future of our industry than I am right now, even though we are in the middle of this deep recession,” Barrett said.

Intel is cutting its investments in technology companies to about $200 million this year, from about $1 billion in previous years.

“The drop is solely related to the marketplace. The venture capital market has dried up with a lack of new investments,” Barrett said.

In China and India, however, there hasn’t been a drop in investment, and that is helping those countries fuel growth in computer technology, Barrett said.

On Friday, Intel shares fell 13 cents to $13.71 on the New York Stock Exchange.