A bleak beginning to the Semicon West show in California was provided courtesy of Intel's Q2 results. The company is to cut expenses by $2.1bn in Q3 with 4000 people set to lose their jobs. Further, capital spending for the year is to be reduced from $5.5bn to $5.1-5.2bn, The 2002 R&D budget will be $100m less at $4.0bn from $4.1bn. Q3 revenues are expected to be $6.3-6.9bn.

The job losses of 5% of the 83,000 workforce are proposed to come through
"attrition, voluntary separation programmes and some targeted business
disinvestments". These will come over a six month period. The capital
spending cut is planned to be "primarily due to non-fab-related spending
reductions, with no change in the company's current and future
microprocessor capacity plans". For Q2, net income was up 128% year-on-year
at $446m on flat revenues of $6.3bn. Excluding acquisition-related costs,
net income was down 39% at $620m.
"Although an overall industry recovery has been slow to materialise, we
still expect a modest seasonal increase in demand in the second half," says
Intel CEO Craig R Barrett.
The announcement created a greater stir as a result of Intel's history of
not cutting capital spending budgets mid-year.
James V Covello of Goldman Sachs challenges Intel's assertion that it can
restrict the majority of the capital spending cut to non-fab items. He
points out that $2.5bn has already been spent. At the start of the year the
capex was proposed to be split 50% for fab equipment, 25% for building work
and 25% for "other" acitivities. Assuming this spending pattern, $625m has
already been spent on the "other" category with only another $625m up for
"saving". The capex cut would almost halve this figure.
Before the Intel Q2 results announcement, Deutsche Banc's Alex Brown
fingered Intel's investment in its high-volume 300mm fab programme in New
Mexico as a possible source of savings from delayed equipment delivery.
Brown suggests that shipments to New Mexico have already been pushed out on
the basis of discussion with his industry contacts. Brown was predicting the
capex cut at the $4.5-5.0bn level rather than the actual $5.1-5.2bn.
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Atomic layer deposition
Applied Materials is to announce "a way of depositing chip materials one
atomic layer at a time", according to the Financial Times. The company has
been working on the technology for "several years".
"This technology puts us a year or more ahead of our competition," Applied's
CEO Jim Morgan told the FT.
The company believes the technology will be used to produce chips five years
from now.
Other companies with atomic layer deposition are Europe's ASM International
and Genus in the USA.