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Intel Puts Its Money Where Its Future Is



Silicon Valley is littered with the bones of companies that brought a bright idea to market, only to be unable to follow up with next-generation products and the management skill to thrive in a world economy. Among the handful of U.S. companies that are proving an exception is Intel Corp. (page 48).

To be sure, the king of the microprocessor business has been blessed with one powerful advantage. ibm decided in the 1980s to build its personal computer around an Intel chip. Since then, Intel has provided the brain for 100 million-plus ibm-style pcs.

That scarcely detracts, however, from what Intel is trying to achieve at the moment. Some competing chip companies are cloning Intel's most profitable products. Others have brought out their own microprocessors that aim to unseat Intel entirely. In the face of all this, Intel is displaying the type of aggressiveness that more U.S. companies could use.

Chief Executive Andrew Grove is planning his product line further into the future than ever. To turn those plans into action, he's spending $2 billion this year on research and development, plant, and equipment--a staggering sum for a company whose revenues will be about $5.5 billion. Most impressive, he is speeding chips to market earlier to hold his rivals at bay, a strategy made possible in part by abandoning the arrogance with which Intel once treated customers and paying more heed to what they want as the company designs and builds products.

Not every U.S. manufacturer has the money or resources to attempt all this. But for those who do, or just want to try, Intel offers an important lesson: Move fast, investing heavily in r&d.

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