Intel Memo

Intel Memo

| |Intel |

Memo

To:

From:

CC:

Date:

Re:

We have come to realize that microprocessors alone won’t be enough to sustain and continue to be very profitable. This has led to us expanding into other markets. This was seen in 1998-2001 when profits started to drop. In that time period, Intel entered 5 different markets. All of the markets were exited by 2001. These were all complimentary markets that provided a strategic advantage to be in.

These markets consisted of:

• Webhosting and online services

• Toys

• Audio products

• Internet appliances

• Wired and wireless handheld PC accessories

At Intel, we have also tried and succeeded in entering foreign markets. In 1997, we chose to open a plant in Costa Rica. This plant was a subsidiary of Intel, as we had full control and provided all of the investment capital. The invested total came out to around $600 million.

Some of the reasons for choosing Costa Rica were the following:

• Tax exemptions

• Labor force is highly educated

• Stable politics

• Corruption isn’t a sizeable concern

As with entering any foreign markets, there were also drawbacks:

• Poor infrastructure, especially roads and airports

• Power generation and distribution

• Telecommunications infrastructure

Another subsidiary that we have crated was Intel Federal. It was created to work directly with the US government. The goal is to reach performance levels of 100 times greater than present day’s performance levels by 2018. Previously, Intel had only sold to the government indirectly.

The path of using wholly owned subsidiary has the following benefits:

• Allows for complete...