Intel's $7.5 billion capital spending programme this year is on track despite a dramatic fall in sales and earnings in the first quarter, Intel chief financial officer Mr Andy Bryant said during an unexpectedly upbeat conference call with analysts and reporters last night.
Intel expects to cut 5,000 jobs by the end of 2001, most of which will come through normal attrition, according to Mr Bryant.
The semiconductor firm employs 3,200 people at its Leixlip, Co Kildare, campus, with a further 1,200 people on long-term contracts. It decided last month to scale back its $2.2 billion expansion on the site to counter difficulties in the global market but has said it remains committed to the project and would accelerate development next year aimed at producing more advanced microprocessors and employing an extra 1,000 people.
The Santa Clara, California-based company said capital spending would concentrate on 0.13-micron process technology and 300-millimetre process technology, which Intel said should lead to cost-per-unit reductions from 2002. Research and development spending, outside of research already in process, would be some $4.2 billion for the full year.
"Looking beyond the current environment, we believe our aggressive investment in new manufacturing technologies and the development of cost-competitive, leading-edge products is the winning strategy," Intel president and chief executive officer Mr Craig Barrett said.
Intel shares rose 11 per cent in after-hours trading as the chip maker surprised analysts by forecasting a strong second half. The market also reacted positively to the announcement by Mr Barrett that "our microprocessor business [which accounts for 80 per cent of business] appears to have stabilised from our current business level".
Falling sales in Europe helped contribute to a 82 per cent plunge in first-quarter earnings, in line with the dismal forecast the chip giant issued last month.
Intel said net income came to $485 million, or seven US cents a share, compared with $2.69 billion, or 39 US cents a share, a year earlier. Revenue fell 16 per cent to $6.68 billion from $7.99 billion a year earlier.
Sales during the first quarter fell to $6.677 billion from $7.993 billion in the same quarter last year, representing a year-on-year fall of 16 per cent and a 23 per cent slip from the prior quarter.
Mr Paul Otellini, general manager of Intel Architecture Group, said demand in the first quarter was weak across all regions, although the Americas market accounted for the "bulk of the decline". Intel shares gained in after-hours trade, rising 11 per cent at one point.
Analysts said Intel planned to slash prices by 50 per cent to 60 per cent by the end of the month on some of its highest-performing chips.