The world's largest semiconductor company is
widely seen as a bellwether for the semiconductor industry and the
health of the global economy as a whole. Strong sales can indicate
increasing consumer confidence and spending. Many investors will
interpret Intel's strong results as a sign that it is a good time to
invest into technology companies, which could help spur further
research and development of new technologies and products.
has been successfully following its plan to reduce production in
order to reduce inventories of CPUs and chipsets, especially of older
models. This enables it to transition more quickly to newer models
like the Core i5 without have to take large writedowns
from excess stock. It announced the close
of several obsolete fabs in the first quarter and a quick ramp to
new 32nm products as keys to success. Intel has also established
"inventory hubs" where it holds its products until OEMs
require it. These are different from conventional warehouses in that
these products are already ordered, but are simply a more efficient
means of order fulfillment across multiple customers.
company spent $2.75 billion in the third quarter, with a large
percentage of that going toward the 32nm Westmere ramp. The
firm's transition hinges on production going smoothly at Fab D1D, Fab
D1C, and AFO (Aloha Factory Operations).
During a conference
call, Intel noted that it received a larger than expected boost from
the back to school season. It experiences strong notebook sales,
especially in the CULV segment. Sales also picked up significantly in
China and the Asian market. The firm is also seeing strong
adoption of Nehalem-based
Xeon processors as companies are consolidating dozens of older
inefficient servers into Xeon racks.
Production of 32nm
Westmere chips is already underway. Intel is growing
inventories in order to support a strong launch, and production is
steadily increasing to meet expected demand due to Windows 7 and the
Christmas shopping season.