Intel Expects Stimulus Packages to Boost IT Spending

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Economic stimulus packages by governments around the world could increase demand for information technology products, an Intel executive said Monday.

Governments worldwide plan to spend US$3 trillion in economic stimulus, said Thomas Kilroy, vice president and general manager of Intel's Digital Enterprise Group, in an interview in Bangalore.

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Intel is trying to engage these governments to inform them of the benefits information technology can bring to some vertical segments, such as healthcare, Kilroy said.

Worldwide PC processor shipments were down in the fourth quarter of last year, by 17 percent sequentially and 11.4 percent year-over-year, research firm IDC said in February. Further declines in demand in the first quarter of this year point to a very poor outlook for the first half of the year, according to IDC.

Intel's revenue dropped by 23 percent year-on-year in the fourth quarter last year, while profits were down 90 percent.

But people still need to invest for the future.

"If we stop and blink in 2009, we will pay for that," Kilroy said.

The company said in February that it was investing US$7 billion over the next two years in factories to make chips using new 32 nanometer manufacturing technology. Intel also said its new line of processors for servers, desktops, and laptop computers, code named Westmere, will be the first processors built using the technology. However, Intel also announced layoffs of at least 5000 employees in a restructuring of its manufacturing process.

The company has continued capital investments and spent on research and development during previous downturns like the Asian financial crisis in the late 1990s and the dotcom bust, Kilroy said.

Intel's investment strategy continues even in the current economic crisis, and the company thinks this time there is a better opportunity for success because of the stimulus packages being introduced by governments around the world, Kilroy said.

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