Intel dampens down Willamette fever

Heavyweight Intel executives told Wall Street financial analysts yesterday that Willamette is likely to arrive in the last quarter of this year, thus putting a more realistic spin on expectations aroused by senior executive Pat Gelsinger earlier this week. At the same time, Intel re-iterated its push to take advantage of opportunities offered by the Internet, and said that it would invest further money in ventures aimed at growing this side of the firm's business. Andy Grove, Intel's chairman, kicked off by telling the analysts that his firm was in the middle of a major change. He showed a simulation that, he said, demonstrated the whole Internet ran on silicon and Intel was building up a product portfolio relevant to those changes. Senior VP Paul Otellini started off by saying that reports last year that the PC era was over needed a "reality check". The PC business had grown by over 21 per cent last year, and IDC had raised its forecast for this year to 19 per cent. "This is a very, very large business indeed," he said. Asia Pacific, he said, was recovering nicely. China is now Intel's third largest country market in the world and "never really saw recession". Japan is also showing resurgence as a consumption market for PCs. America and Europe were still showing a consumer-centric demand. In the US, the replacement cycle for PCs was coming down because of an increasingly large notebook penetration, as well as demand for higher performance machines. Notebooks were a good growth opportunity for Intel because of higher ASPs. Celeron volumes were growing "nicely" except for Q1 2000 this year, he said. "We'll continue to keep Celeron very competitive," he said. "We'll introduce speeds of Celeron up to 700MHz in the second quarter." Intel has four fabs producing .18µ micron Pentium IIIs and will introduce a fifth at its Dublin fab towards the end of the year. He said that 50 per cent of Intel processors will move to .18µ by Q2. He told the analysts that Intel was on track to produce its Willamette processor towards the end of the year, with clock speeds starting at 1.4GHz, and aimed at the performance (read high price) sector of the market. That means that Intel will start regular sampling of Willamette products round about summer. Although a source close to Intel told The Register earlier in the week that some Willamette samples were already out and about, PC manufacturers will have to wait quite some time before they get their hands on samples. Timna will be introduced at speeds of 600MHz and above. "It's in good shape," he said. Intel already had several PC OEM designs wins. Timna will be incorporated in very small form factors and will have a low bills of material (BOM) cost. A wide number of manufacturers will have machines using Willamette in volume for Q1 2001. Otellini said the 8xx family of chipsets will be fully refreshed. By the end of the year over 80 per cent of shipments will be part of that family. Fifty per cent of these will have integrated graphics, making Intel the largest supplier worldwide of graphics, he said. Intel spends over $40 million a year on validation testing of its chipsets, he said. The chipset business is a driver for overall technology innovations. Intel's installed base of graphics users is over 25 million, he said. Intel has shipped over one million lines of code to support each chipset, two million for the high end chipsets. Otellini said server business grew by 32 per cent in 1999, and Intel server business was growing faster than its Risc competitors. Intel told the analysts that two formerly separate groups -- the Intel architecture group headed up by Otellini, and the design group -- headed up by Dr Albert Yu, will be merged into a single entity. Although no reasons for this change were announced, the rationale is fairly clear given difficulties the firm has had executing on its strategy over the last year. Yu and Otellini will jointly manage the merged group. Intel will introduce a mobile Pentium III running at less than one watt in Q2/Q3, and is also on track with its Timna "system on a chip" processor, which will initially be introduced at 600MHz. The firm will invest $100 million on its e-commerce drive, appointing 1,000 Internet specialists who will work at 30 e-business centres across the world. This is part of its server farm push, intended to promote Intel architecture as the major engine to power the Web. ®