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By Maggie Shiels
Technology reporter, BBC News website, Silicon Valley

Intel, already the world’s biggest semiconductor company, has big plans for the future as it celebrates 40 years in the chip making business.

The company hopes to see Intel chips being built into virtually every segment of computing.

Paul Otellini, Intel’s chief executive and president said the next four decades would be about ubiquitous computing encompassing every aspect of daily life.

“We’re now focusing on how to take [Intel’s] architecture into new areas, bringing the benefits of that architecture we have built into new markets,” he said. “Bringing the benefits of the internet into devices that don’t have it today. Bringing the benefits of computing and communications to billions of people that have no access to it today.

The company’s past success gave it a “unique opportunity,” he said.

It might be a great opportunity, but some warn that diversifying into products like smart phones and MP3 players won’t be easy for Intel.

“It’s a huge challenge for them,” said Dan Hutcheson an analyst at VLSI Research.

“They are trying to get into a market where there are really strong existing suppliers like ARM in the UK and Freescale in the US.

“Intel presently sells products in the $45-$300 (£22-£150) range and now they want to move into the $5-$12 market. That’s a significant shift to take a company like Intel from high end to medium to low end.”

History

Intel has been involved in the semiconductor industry since its earliest days. Intel co-founder Robert Noyce is jointly credited with inventing the microchip or integrated circuit.

Looking back on what that has given rise to, Mr Otellini said: “When we introduced the microprocessor no one could have predicted that the market for PCs would be greater than 350 million units a year.

“Over the next 40 years, Intel technology will be at the heart of breakthroughs that solve the big problems.”

The other co-found of Intel was Gordon Moore who also played a significant part in defining the industry.

Named after him, Moore’s Law describes an important trend in the history of computer hardware. Its premise is that the number of transistors that can be placed on an integrated circuit doubles roughly every 18-24 months.

Challenges

At a meeting ahead of Friday’s anniversary, Pat Gelsinger, Intel’s chief technologist, met reporters to map out his vision of the company’s future and its ability to maintain the trend predicted by Moore’s Law.

“I compare Moore’s Law to driving down the road on a foggy night, how far can you see Does the road stop after 100 metres How far can you go” said Mr Gelsinger.

He revealed that, despite the hampered visibility, Moore’s Law is good until 2029 but keeping up with its demands will be expensive.

Mr Gelsinger said increasing the size of the circular wafers from which chips are cut would take its toll on the industry.

He said Intel spent more than $7bn on plant and equipment when it switched from 200mm to 300mm wafers in 2001. It would cost more than that to move 450mm wafers.

The move will mean savings of about 40% to manufacturing costs but the investment needed to make the switch will force consolidation. It could, he said, reduce the number of chip makers to less than 10.

“We used to have 100s of companies that built fabs, today we have tens of companies and, as we make this move, you will see single digits of manufacturers,” he predicted.

That, said Leslie Fiering, a senior analyst with research firm Gartner, was not good news for the customer.

“If you don’t have strong competition the temptation is there to milk the product a bit longer and keep prices high a bit longer and keep older products around a bit longer,” warned Ms Fiering.

Birthday blues

Intel’s anniversary week started well but ended on something of a sour note.

Monday saw the it launch its Centrino 2 notebook technology which aims to help laptops last longer on less power.

On Wednesday it reported record second quarter revenues with net income up 25% to $1.6bn.

Then before there was time to put the candles on the 40th birthday cake came the announcement from the European Commission that it was filing a new set of anti-trust allegations against the chip giant.

The EC investigation, which started in 2001, accused Intel of three new pieces of “abusive conduct” designed to wound rival AMD.

Intel already faces an anti-trust suit from AMD in the States and is under investigation by the New York Attorney General’s office and South Korean regulators.

Intel has consistently denied any wrongdoing. In a statement issued after the EC filed its charges Intel said it was “disappointed” with the claims made against it.

It added: “the allegations stem from the same set of complaints that our competitor, AMD, has been making to regulators and courts around the world for more than 10 years”.

AMD declined to comment.

Low key

Despite the milestone, Intel took a low key approach to hitting 40.

“There is no big flashy party because Intel sees this as a good opportunity to give back to the community and the long term commitment of its workers,” said spokesperson Agnes Kwan.

The community celebration involves 500 young people from 21 countries developing an online digital mural that will show what computers will empower us to do over the next 40 years.

Project leader Favianna Rodriguez said the mural shows “We live in a global society, in many ways, technology has allowed us to be even more connected.”

Some of the ideas illustrated in the mural include wearable computers, experiencing virtual education, teletransport, peaceful lives and living on Mars


This article is from the BBC News website. © British Broadcasting Corporation

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