Intel boosts capex, eyeing 7-nm node

Intel boosts capex, eyeing 7-nm node

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Intel Corp., is edging up capital expenses this year, in part to pave the way to 7-nm process technology and to bolster its efforts in tablets and so-called ultrabooks. The company also tipped plans to extend its x86 instruction set architecture for security in a conference call announcing record quarterly revenues.
By eeNews Europe


Separately, Intel lowered to eight to 10 percent its expectations of overall PC market unit growth for 2011, although it said revenue growth would be stronger. The company had projected growth as high as 12 percent, though analysts generally forecast it will be about five percent this year.

Intel plans to spend $16.2 billion this year on a wide range of internal investments, up $500 million from earlier forecasts. The funds will fuel efforts in areas ranging from servers, notebooks, tablets, smartphones and enhancements to its 14nm fabs under construction.

"Some of [the increased fab expenses] are a pull-in from next year [because we are moving] faster than expected into our 14nm factories," said Stacy Smith, Intel’s CFO in the conference call.

But "the larger portion is an increase in the scope of the factories," Smith said. The 14-nm plants will now be outfitted to handle expected needs for 10- and 7-nm process technology, he added.

"There’s a higher return-on-investment to do that now rather than later," Smith said. Currently Intel’s capex spending is focused on enabling "22-nm peak [production] and [building] 14-nm shells, and soon you’ll see us move into the cycle of 14-nm equipment" purchases, he said.

Intel’s 22-nm process technology is on track for volume production this year, said Paul Otellini, Intel’s chief executive. The company expects the process will help it extend its lead over the rest of the chip industry, he added.

Part of the $500 million increase will fuel Intel’s work on ultrabooks, a new generation of ultra-thin notebooks with tablet features, a system concept announced in June. Intel is using the ultrabook concept to shore up its notebook business against ARM-based competitors such as Nvidia, Qualcomm and Texas Instruments expected to power systems next year based on Windows 8.

"The ultrabook project is akin to Centrino, trying to move the market to a new form factor and a new feature set like instant-on, touch interface and always-on systems," said Otellini, referring to Intel’s notebooks that pioneered use of Wi-Fi. "There’s a great deal of engineering that has to be done because these features cost a lot of money, but PC prices won’t go up, so we have to cost-engineer these products," he said.

Ultrabooks could help drive growth that has slowed in segments such as netbooks. "Netbook [growth is] down to some extent because of tablet strength and good values in low-end notebooks," Otellini said.

Emerging markets are driving plenty of growth for PCs, Otellini said.

For example, "Brazil could be third largest market for computers in 2012," he said. "I was just in Brazil, and the fact it’s going to be third is astounding because it was not long ago it was sixth or seventh," he added.

At its Intel Developer Forum in September, the company will give more details about its ultrabook plans. It is also expected to announce the first results of collaboration with its new security software division, McAfee.

Intel is adding new security instructions to its processors as part of the effort expected to enable hardware-backed authentication based on the standard set by the Trusted Computing Group. McAfee is providing enabling software for the effort, something Microsoft has not yet done in Windows.

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