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Turnaround depends on revival of US economy: Intel chief

Fakir Chand in Bangalore

Intel Corporation president and CEO Craig Barrett on Friday hinted that the technology sector would turn around permanently once the US economy picked up momentum, which is expected to begin in the near future.

Barrett, who is on a two-day flying visit to Bangalore, told rediff.com at the Infosys campus in Bangalore that he expected only a seasonal increase in the computer industry during the second half of the current year.

"Some exciting new technologies on the anvil should interest the consumers in the areas of micro-processors and operating systems. We also know that there is no real hangover of inventory in the PC pipeline or channel. But the real turn around in the IT industry will begin once the US economy turns around, and I have not predicted the latter," Barrett mentioned cautiously.

Asked what are the indicators for the revival of the US economy, Barrett said nobody could predict exactly when it would start picking up because it (the US economy) had, unusually, the longest positive run in anyone's memory during the last decade.

"It was probably due for cyclical slow down, because if you look at the history of those slow downs over the last 30-40 years, they typically run from a few months to perhaps a year or so. Going by the past, the cycle should be turning around in the near future." Barrett affirmed.

Stating that the revival of the computing industry largely depended on the growth of the European economy as well, Barrett said for companies like Intel the US was not the only market it depended upon for growth rates.

"Much of our business is generated outside the US market, especially in the Europe and the Asia-Pacific regions. It is not the US economy alone that is impacting the tech sector, but also the trickle down effect of other economies, especially in western Europe and Far East, including Japan and Korea."

Giving an account of the state of the semiconductor industry in the wake of the tech slow down since early this year, Barrett said with the Internet becoming the driving force of the computing industry, there would be fundamental changes in the existing structure of the hardware and software sectors as they would have to increasingly leverage their strengths to address the emerging markets, where efficiency, productivity and cost-effective solutions will give the competitive edge for the first movers.

"The state of the industry with respect to global perspective is not only interesting, but also encouraging as new players emerge from countries like India, posting moderate growth rates at a time when their counter parts in the Silicon Valley are shrinking owing to the slow down."

"Nevertheless, I am optimistic that the situation will change for the better soon because the computing sector will turn around from the second half of this year, though communication industry will take a longer time to revive."

Few of the indicators are the growth rates of global companies like Intel itself, which is projected to post an annual growth rate of 17per cent-18 per cent this year, though down from the previous years' average growth rates of 25 per cent-30 per cent.

The industry on the whole is expected to post about 20 per cent, which would be half of what it was during the boom period in the recent past.

Earlier, addressing Infoscians on the occasion of inaugurating a joint e-business solutions lab at the campus in the electronic city, Barrett told the bright techies to gear up for the exciting opportunities being thrown up by the ongoing revolution in the areas of e-commerce, entertainment, and communications, thanks to the Internet becoming the universal or converging platform to drive all the emerging technologies and business, the world over.

"There was a time when the tech industry could register growth rates addressing only the vertical markets. It is no longer the case, because the Internet as well as the Ethernet protocols have brought about a sea change in developing new solutions and applications, creating horizontal markets, where new communication devices such as PDAs, pocket PCs, hand sets, and cell phones are demand new instant access through the Net," Barrett disclosed.

Commenting on Intel's initiative with Infosys to set up a dedicated e-business solutions lab, Barrett said that the world's largest chip-maker did not believe in holding up investments or development in its research efforts as innovation and integration were essential to keep pace with the changing technologies.

"Though the business has been down, Intel continues to invest around $4 billion on R&D alone every year as growth of digital computing is bringing about new challenges to the hardware and software sectors to address the ever-increasing demand for new devices and applications from customers."

According to Infosys CEO N R Narayana Murthy, the joint lab in the campus was the first of its kind in India, and would focus on building practices on Intel architecture platform for the enterprise customers.

"Under the e-business solutions provider program, Infosys will work on enterprise performance engineering on Intel-based platforms and architecture in the areas of legacy systems, optimisation of solution stacks, and data networks."

Barrett also launched the Infosys Legacom Service, which enables companies to leverage their legacy assets as they migrate to open standards-based distributed architecture like Intel platforms.

"More businesses worldwide are becoming e-corporations by using the Internet and e-business to conduct commerce and interact with customers, suppliers, partners, and employees. This e-business lab will speed the deployment of optimized solutions by helping companies take advantage of the price and performance leadership of Intel architecture to reduce costs and simplify design and deployment," Barrett claimed.

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