Intel boosts capex, eyeing 7nm node

SAN JOSE, Calif - Intel Corp is edging up capital expensesthis year, in part to pave the way to 7-nm process technology and to bolsterits efforts in tablets and so-called ultrabooks. The company also tipped plansto extend its x86 instruction set architecture for security in a conferencecall announcing record quarterly revenues.

Separately, Intel lowered to 8 to 10% its expectations ofoverall PC market unit growth for 2011, although it said revenue growth wouldbe stronger. The company had projected growth as high as 12%, though analystsgenerally forecast it will be about 5% this year.

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

"Some of [the increased fab expenses] are a pull-infrom next year [because we are moving] faster than expected into our 14-nmfactories," said Stacy Smith, Intel's CFO, on the conference call.

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

"There's a higher return-on-investment to do that nowrather than later," Smith said. Currently Intel's capex spending isfocused 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 volumeproduction this year, said Paul Otellini, Intel's chief executive. The companyexpects the process will help it extend its lead over the rest of the chipindustry, he added.

Part of the $500 million increase will fuel Intel's work onultrabooks, a new generation of ultra-thin notebooks with tablet features, asystem concept announced in June. Intel is using the ultrabook concept to shoreup 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 tomove the market to a new form factor and a new feature set like instant-on,touch interface and always-on systems," said Otellini, referring toIntel's notebooks that pioneered use of Wi-Fi. "There's a great deal ofengineering that has to be done because these features cost a lot of money, butPC prices won't go up, so we have to cost-engineer these products," hesaid.

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

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

For example, "Brazil could be third largest market forcomputers in 2012," he said. "I was just in Brazil, and the fact it'sgoing to be third is astounding because it was not long ago it was sixth orseventh," he added.

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

Intel is adding new security instructions to its processorsas part of the effort expected to enable hardware-backed authentication basedon the standard set by the Trusted Computing Group. McAfee is providingenabling software for the effort, something Microsoft has not yet done inWindows.

This story was originally posted by EE Times.
 


Intel boosts capex, eyeing 7nm node