To Cap Ex Or Not To Cap Ex

Electronic News, Nov 12, 2001

INTEL CORP. TOLD INVESTORS THAT IT IS RAPIDLY MOVING TO 0.13-micron process technology and 300mm production after spending $7.5 billion in upgrading its fabs during 2001, despite the horrendous industry downturn. Latest estimates from Intel peg the company's 2002 spending plan at $6.75 billion, but James Coyello, capital equipment analyst for Goldman, Sachs and Co. in New York, said he suspects Intel may decide next year to drop that figure to around $5.5 billion. Why delay making that move? Intel's capital expenditure plans have a direct bearing on the capital equipment sector, and Intel may not relish announcing a cut now that would put more downward pressure on capital equipment company sales and stocks for the rest of the year, he believes.

Speaking of cap ex, some on Wall Street are optimistic about Advanced Micro Devices Inc.'s (AMD) plans to reduce costs from its manufacturing process next year in order to remain competitive with Intel. But one market research analyst said the Sunnyvale, Calif.-based MPU maker could do even more. IDC's Shane Rau said while AMD focuses on dispelling the megahertz myth through its True Performance Initiative, it could better use the money to shift its Athlon processors over to 0.13 micron faster, or pull in its 2003 plan to utilize silicon-on-insulator technology. Finding a truer gauge of microprocessor performance would have more resonance if it came from an industry-wide consortium involving Intel, AMD, Via, Transmeta and others, Rau added.