Intel (Nasdaq: INTC) hosted its semiannual Developer Forum on Tuesday and shared with a crowd of 5,000 its thoughts on the near-term and longer-term future. The company confirms a wide economic slowdown in the United States, but said the slowdown hasn't moved to the rest of the world. If it does, America's technology leaders would be hit again. Intel reassured the crowd, though, that a slowdown in the U.S. hasn't led to a simultaneous slowdown in international markets in nearly 30 years.

Intel is preparing for renewed demand either way. In 2001, the company will spend approximately $4.3 billion on research and development, up 10% from 2000, and $7.5 billion on capital investments, up 12%. The investments will fund these activities and more:

  • The retrofit of chip plants to make processors with copper wires rather than aluminum.
  • A move to smaller 0.13-micron technology for greater efficiency.
  • A move to 300-millimeter chip wafers, up from 200-millimeter. This will increase the chip-yield per wafer 225%, resulting in a 35% reduction in production costs.
  • Preparation for manufacturing the new high-powered "McKinley" chip for servers. 

Computer processors still account for 80% of Intel's annual revenue, so they're naturally the focus and will continue to be. Intel admitted that new ventures, including Web-hosting, are "performing," but are not resulting in as much revenue as hoped. This is partly due to the slowed economy, and partly because it's difficult to grow any new business.

Intel will introduce dozens of new products this year, from faster, lower-voltage chips to network management software and networking hardware. Products debuting in 2001 include:

  • The "McKinley" chip for servers, which will reach production by the end of the year at 1.4GHz and higher. Samples of the chip became available in January.
  • A 1GHz mobile Pentium III chip, to be released later this year. It will surpass the low-voltage mobile 700MHz Pentium III that was just released on Tuesday. Mobile chips will be made on 0.13 micron and with copper wires in the second half of 2001.
  • Intel's new technology for interconnecting servers that will compete with a product, Lightning Data Support, from Advanced Micro Devices (NYSE: AMD). Intel's product debuts Thursday.
  • At least 35 new Intel Exchange Architecture (IXA) products, mainly chips, to be introduced for Intel's networking division.
  • Itanium server chips, which will finally be released in the second half of 2001.
  • Pentium III Xeon chips at 900MHz, to be released this quarter.
  • Pentium 4 Xeon chips, code-named Foster, to be released in the second quarter at 1.4GHz and higher.

Additionally, Intel plans the following post-2001 developments:

  • Pentium 4 chips for mobile computers, expected to be released by mid-2002.
  • A 2003 release of new architecture for its mobile chips that focuses on wireless connectivity and, with that, power savings for extended mobile use.

The "George Jetson" home
Intel continues to support an "Extended PC " idea. This is a vision that it shares with Microsoft (Nasdaq: MSFT) and that sees the personal computer as the brain of an extended computing network in the home. Several smaller computing devices connect to the network, one for each room. These devices serve connectivity, entertainment, information, and communication needs, and they also in effect run and monitor the home (especially in Bill Gates' version of the idea).

This extended PC platform will deliver high bandwidth applications throughout the home, including video, audio, and other media. Such applications demand high processing abilities in several devices per home, a vision that becomes more realistic as prices continue to decline.

But this is still only a vision -- it's a George Jetson type of home -- and it will take years to reach widespread fruition. Meanwhile, Intel says that the only way out of a recessionary economy is to "spend your way out," so it's aggressively spending on new products and facilities. One company alone cannot "spend" the economy out of a recession, however, so Intel's spending could lead to several years of waiting for a good return on its costs, should the economy around Intel continue to slow. That said, what choice does Intel have? It can't sit on its hands and wait.

Questioning the future
At $29, Intel's stock has returned to late 1998 prices. It trades at 16 times trailing earnings and 27 times this year's estimate (which is a guess) of $1.05 per share. As an investor, my main concern is this: We are not likely to see another computing boom the likes of which we witnessed the past decade. I don't see the catalyst, yet, for consumers to rush to buy the latest technology, and broadband Internet access is being adapted much more slowly than anticipated. The computers that have been sold in the past few years are fast enough for what most people want to do with them right now: Email, instant messaging, personal commerce, and Web surfing.

When consumers are ready, en masse, for an advanced, multimedia computing experience, Intel will be there, waiting, with products that deliver. The question is, how long will Intel need to wait?

To discuss Intel's challenges, visit its discussion board. Fool on!

Jeff Fischer owns shares of Intel. View his profile to see his entire portfolio. The Motley Fool is investors writing for investors.