Intel growth to be driven by Asia

SINGAPORE – Intel sees demand from emerging markets and the introduction of low-cost laptops pushing its microprocessor sales in Asia this year as they cross their fingers on the troubled U.S. economy.

“Overall, I’m optimistic about growth in Asia, but it would be imprudent not to be cautious and mindful of the economic situation in the U.S.,” said Navin Shenoy, general manager of Intel’s Asia-Pacific operations, during a telephone interview.

Intel’s Asia-Pacific sales include chips sold for use in Asia as well as products that are built into computers for export to other regions. As a result, regional executives are closely watching what happens in the U.S., where concerns are mounting that the economy is headed for a recession.

“The export business that’s dependent on the United States might see a bit of a slowdown, but the bulk of the growth is coming from [Asian] consumption. The consumption that we see across Asia-Pacific is quite strong and I see no impact or slowdown there whatsoever at this point in time,” Shenoy said. “But we’re going to watch it. We’re going to watch it carefully,” he said.

Analyst firm IDC expects Asian PC shipments to grow 16.7 per cent this year, compared to an increase of three per cent in the U.S. “We’ve pretty much been assuming no major impact [on PC demand] from the subprime crisis in the U.S.,” said Bryan Ma, director of personal systems research at IDC Asia-Pacific, adding that the market research firm is monitoring economic developments in the U.S.

Intel is coming off a strong fourth quarter, despite being squeezed somewhat by lower-than-expected flash memory prices. Strong processor demand during the period helped push Intel’s Asia-Pacific revenue to US$5.3 billion, a quarterly record and about half of the company’s total sales.

“Demand on the CPU side was strong. We set a record in terms of CPU shipments [and] we set a record for chipsets,” Shenoy said. Most of Intel’s processor revenue during the period came from 65-nanometer chips. The first chips from Intel’s 45-nanometer processor lineup, called Penryn, were introduced in November and made a “nominal” contribution to Asia-Pacific revenue during the fourth quarter, Shenoy said.

That contribution will increase rapidly over the next several months, with Intel’s shipments of 45-nanometer processors to surpass those of 65-nanometer chips during the third quarter, he said.

Two upcoming Intel products, Silverthorne and Canmore, should also make their presence felt in Asia this year, Shenoy said. Silverthorne, which is produced using the same 45-nanometer manufacturing process, is the first chip designed by Intel to be used in low-cost laptops and will be available during the second half of the year. Currently, Intel offers a version of its aging Celeron M processor for these types of machines, such as Asustek’s popular Eee PC.

Silverthorne, which is intended to be inexpensive and easy on battery life, will appear in low-cost notebooks that should spur faster growth in Asian demand for mobile computers, Shenoy said.

The other chip that Intel expects to see do well in Asia is Canmore, a system-on-chip announced during the Consumer Electronics Show that combines a processor with graphics and high-definition video capabilities. Designed for set-top boxes and other consumer electronics, Canmore is due during the second half of this year. “There are tremendous opportunities for a product like that in countries like Taiwan and Korea,” Shenoy said.

One technology that isn’t expected to make much headway in Asia this year is WiMax. Apart from South Korea, where WiMax is already in commercial use, the wireless broadband technology hasn’t caught on much in Asia. As a result, WiMax products will not see widespread adoption in the region until 2009, Shenoy said.