Intel reports record revenues, sees 300mm benefits

January 15, 2004 – Intel Corp., Santa Clara, CA, closed out 2003 with record revenue and better-than-expected profits thanks to strong growth in PCs and servers, and efficiencies resulting from leading-edge technology investments.

Revenue in 4Q03 was $8.74 billion, up 12% sequentially and 22% from a year ago, and a tick above the previous record of $8.73 billion set in the third quarter of 2000. Net income was $2.17 billion, up 31% from 3Q03 and more than double the profit recorded in 4Q02. Gross margins were a record 63.6%, compared with 58% in 3Q and 52% in 4Q02. The results include a previously-announced $611 million writedown related to the company’s wireless communications and computing group.

For the full year of 2003, revenue was $30.1 billion, up 13% from a year ago, while net income rose 81% to $5.6 billion. “2003 began with a question mark and ended with an exclamation point,” claimed Intel CFO Andy Bryant.

Record sales were reported in the company’s architecture microprocessor units, as well as for chipsets, motherboards, and Ethernet connectivity products. Strength was seen particularly in North American and western Europe, which Bryant said is an indication of a turnaround in corporate IT spending.

Intel revealed capital spending plans for 2004 of $3.6-$4.0 billion, a slight increase from a year ago, but well below its spending in 2002 and nearly half of its record capex of $7.3 billion in 2001. Bryant said the company could save $1 billion in capex this year by focusing on its 300mm wafer-processing equipment and advanced processes. “The efficiencies of 300mm means less money for more capacity,” matching the savings achieved in 2003 and bringing the total savings for the company’s 300mm program to date to over $4 billion, he said in a conference call with analysts. Intel currently has two 300mm fabs online, and plans to open three more in the next year.

Intel plans to keep increasing its investments in R&D, however, spending $4.8 billion in 2004, up from $4.4 billion in 2003.

Looking ahead to 1Q04, Intel projects revenues to be flat to slightly down, in a range of $7.9-$8.5 billion, with a net income of roughly $4.7-$5.1 billion and gross margins of 60%.


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