Posted on: Tuesday, December 17, 2002

Intel chairman anticipates little growth in chip sales

By Dan Goodin
Bloomberg News

SAN FRANCISCO — Intel Chairman Andy Grove said there's little growth in chip industry sales and he doesn't know when that will change.

"During the course of a year, not a lot has happened," Grove told reporters. "I have no way of guessing how long it's going to be" before the industry recovers.

Chip sales posted their steepest decline last year and will rise by 1.8 percent in 2002, the Semiconductor Industry Association said last month. Slowing growth in demand for personal computers, cell phones and other electronics devices caused the trade group to lower forecasts for 2003 and 2004.

Intel's revenue fell 21 percent in 2001 and is forecast to fall slightly again this year, according to the average analyst estimate in a Thomson First Call survey. Grove said it was impossible to predict when demand would return.

"There are so many factors that have nothing to do with the industry that could go either way," he said.

Intel shares have lost 42 percent of their value this year.

Grove's remarks at a recent conference in San Francisco followed his speech at the International Electron Devices Meeting. He told electrical engineers and others that the industry's ability to build faster chips is being challenged by the amount of power the new products will consume.

The computer industry will need ever-faster processors to tackle challenges such as building machines that can recognize speech. They're also needed to do "probabilistic" computations, such as those performed by online retailer Amazon.com Inc., which compares purchases against large amounts of data to recommend other items a customer may want.

"The demand is there and the possibilities are mind boggling, but we've got a long way to go," Grove said.