Intel 2003 Annual Report Download - page 40

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Table of Contents
Index to Financial Statements
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Intel Architecture Business
The revenue and operating income for the Intel Architecture operating segment for the three years ended December 27, 2003 were as
follows:
Net revenue for the Intel Architecture operating segment increased by $3.8 billion, or 17%, in 2003 compared to 2002. Revenue from
sales of microprocessors increased 17% while revenue from sales of chipsets and motherboards increased 16%. The increase in Intel
Architecture revenue was primarily due to significantly higher unit sales and to a lesser extent due to a slightly higher average selling price for
microprocessors, as well as significantly higher unit sales of chipsets in 2003. During the year, we rapidly ramped the new Intel Centrino
mobile technology and the Pentium M processor for mobile computers. We also saw increased sales of Pentium 4 processors with HT
Technology and higher sales of Intel Xeon processors in the server market segment.
Operating income increased by $3.8 billion, or 58%, in 2003 compared to 2002. The increase was primarily due to the impact of higher
revenue, lower unit costs for microprocessors and chipsets, and charges for under-utilized factory capacity that were lower than in 2002 by
approximately $150 million. These improvements were partially offset by approximately $390 million of higher start-up costs in 2003 related
to the ramp of 90-nanometer technology on 300-millimeter wafer manufacturing.
For 2002, net revenue for the Intel Architecture operating segment increased by $870 million, or 4%, compared to 2001. Revenue from
sales of microprocessors increased 4%, and revenue from sales of chipsets and motherboards increased 3%. The increase in microprocessor
revenue was primarily due to higher unit volumes, partially offset by lower average selling prices. The increase in revenue from chipsets and
motherboards was primarily due to significantly higher unit volumes of motherboards.
Operating income for the Intel Architecture business increased by $315 million, or 5%, in 2002 compared to 2001. The increase was
primarily due to the impact of higher revenue and approximately $720 million of lower start-up costs related to the 0.13-micron technology
manufacturing ramp. These positive impacts were partially offset by higher unit costs for microprocessors. Operating income for 2002 was
reduced by a $155 million charge related to the Intergraph Corporation litigation settlement agreement (see “Note 21: Contingencies” in the
Notes to Consolidated Financial Statements).
37
(In Millions)
2003
2002
2001
Microprocessor revenue
$
21,867
$
18,658
$
17,878
Chipset, motherboard and other revenue
4,235
3,658
3,568
Total revenue
$
26,102
$
22,316
$
21,446
Operating income
$
10,411
$
6,592
$
6,277