Intel's $10 billion gamble
A Fortune story on Intel's $10 billion gamble that "by pushing the state of the art in chipmaking faster than rivals are able to, it will reach a point where it can use sheer manufacturing prowess and capacity to undercut any competitor in price, performance, and variety."
"This is the beginning of the consolidation and bifurcation of the semiconductor industry into a handful of leaders and lots of followers," says CEO Craig Barrett, who headed manufacturing before moving to the corner cubicle at Intel headquarters in Santa Clara, Calif. "There will be an equivalent bifurcation in products and profit margins. The products that should command the highest margins are those at the leading edge of design and performance, which result from only one thing--having the best manufacturing technology."
Sounds like typical saber rattling from a notoriously aggressive company. But there's a second motivation in Intel's bet on Moore's Law--a kind of nerdy idealism that includes a pure, simple faith in technological progress and a genuine desire to help revive IT and telecom. Intel thinks its manufacturing capabilities will speed the introduction of incredibly powerful chips that take the Internet to the next level, enabling hundreds of millions of computers, phones, and other devices to be always tied to wireless networks. "We're talking about a half-billion transistors on a chip, and perhaps even a billion," says Paul Otellini, Intel's president, COO, and likely the next CEO. "Suddenly there will be very little limit to what you can design into a single integrated circuit. If you want to talk about a golden age for semiconductors, that's when it will be, and the IT and telecom and consumer electronics industries will be the biggest beneficiaries."