SANTA CLARA, Calif., July 15, 2003 -- Intel Corporation today announced second-quarter revenue of $6.8 billion, up 1 percent sequentially and up 8 percent year-over-year.

     Second-quarter net income was $896 million, down 2 percent sequentially and up 101 percent year-over-year. Earnings per share were $0.14, flat sequentially and up 100 percent from $0.07 in the second quarter of 2002.

     "Overall, the quarter came in slightly better than we expected led by good demand in our computing-related business, which posted solid year-over-year results," said Craig R. Barrett, Intel chief executive officer. "We continued to see strength in emerging markets, and our Asia-Pacific region set an all-time revenue record.

     "Our investments in R&D and manufacturing continued to generate strong products," Barrett said. "We saw excellent market acceptance for new, more powerful versions of the Pentium^(R) 4 processor for desktops and for Intel^(R) Centrino^TM mobile technology for notebooks. In addition, we recently launched our latest Itanium^(R) 2 processor for high-end enterprise computing with broad industry support. On a day when Intel celebrates its 35^th anniversary, our continued focus on product and technology leadership remains the right strategy for long-term success."

     Last year's second-quarter results included a $106-million charge to cost of sales related to winding down the online services business, along with a $112-million write-off of acquired intangibles.

BUSINESS OUTLOOK

Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters.

** Revenue in the third quarter is expected to be between $6.9 billion and $7.5 billion.

** Gross margin percentage in the third quarter is expected to be approximately 54 percent, plus or minus a couple of points, higher than 50.9 percent in the second quarter primarily due to higher expected revenue, lower start-up costs and lower unit costs. Intel's gross margin percentage varies primarily with revenue levels, product mix and pricing, changes in unit costs and inventory valuation, capacity utilization, and the timing of factory ramps and associated costs.

** Gross margin percentage for 2003 is expected to be approximately 54 percent, plus or minus a few points, higher than the previous expectation of 51 percent, plus or minus a few points. The increase is primarily due to higher expected revenue along with lower start-up costs as resources are transferred to next-generation process development.

** R&D spending for 2003 is expected to be approximately $4.2 billion, higher than the previous expectation of $4.0 billion, primarily due to the transfer of resources from 90-nm start-up activities to 65-nm process development.

** Expenses (R&D plus MG&A) in the third quarter are expected to be approximately $2.2 billion. Expenses, particularly certain marketing- and compensation-related expenses, vary depending on the level of revenue and profits.

** The capital spending expectation for 2003 is unchanged at $3.5 billion to $3.9 billion.

** Gains or losses from equity investments and interest and other in the third quarter is expected to be a net loss of $25 million due to the expectation of a net loss on equity investments of approximately $60 million, primarily as a result of impairment charges on private equity investments.

** The tax rate is expected to be approximately 24 percent for the third quarter and 30.5 percent for the fourth quarter. The lower rate for the third quarter as compared to the second and fourth quarters is due to an expected tax benefit related to a divestiture that is anticipated to close shortly. This divestiture is not expected to have a material impact on income before taxes. The tax rate may be affected by many factors including changes in law, the closing of acquisitions or divestitures, the jurisdictions in which products are manufactured and sold and profits are determined to be earned and taxed, and the ability to realize deferred tax assets.

** Depreciation is expected to be approximately $1.2 billion for the third quarter and $4.7 billion for the year, slightly lower than the previous expectation of $4.8 billion for the year.

** Amortization of acquisition-related intangibles and costs is expected to be approximately $70 million in the third quarter and approximately $300 million for the year.

     During the quarter, Intel's corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. Intel intends to publish a Mid-Quarter Business Update on Sept. 4. From the close of business on Aug. 29 until publication of the Update, Intel will observe a "Quiet Period" during which the Outlook and the company's filings with the SEC on Forms 10-K and 10-Q should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to update by the company. For more information about the Outlook, Update and related Quiet Periods, please refer to the Outlook section of the Web site at www.intc.com.

SECOND-QUARTER REVIEW AND RECENT HIGHLIGHTS

** Gains or losses on equity investments and interest and other resulted in a net loss of $5 million, lower than the expectation of a net loss of $20 million. The net loss on equity investments was $58 million, including the impact of impairment charges of approximately $64 million.

** The tax rate was 29.5 percent in the second quarter, lower than the company's expectation of 30.5 percent, due to a tax benefit related to a divestiture of a prior acquisition that closed during the quarter.

** Intel Architecture microprocessor units and average selling prices were approximately flat.

** Chipset units were approximately flat.

** Motherboard units were higher.

** Flash memory units were lower.

** Ethernet connectivity product units were slightly higher.

Intel extended its desktop performance leadership with the introduction of the 3.2 GHz Pentium 4 processor with Intel's performance-enhancing Hyper-Threading (HT) Technology. The company also launched the Intel^(R) 865 chipset along with new Pentium 4 processors at 2.4, 2.5 and 2.8 GHz. Together, these products bring a number of platform advancements to mainstream corporate and consumer PCs, including HT Technology, an 800 MHz system bus, and 400 MHz DDR memory support. The company also expanded its value desktop lineup with Intel Celeron^(R) processors at 2.4 and 2.5 GHz.

The company broadened the Intel Centrino mobile technology product line with a high-performance 1.7-GHz processor, a low-voltage 1.2-GHz processor, and an ultra-low-voltage 1-GHz processor. Intel also introduced new mobile Pentium 4 processors, Intel Celeron processors and chipsets designed to optimize the thermal characteristics of transportable notebook PCs running at near-desktop performance levels.

Intel increased its enterprise performance and price-performance by introducing a new generation of Itanium 2 processors, faster versions of the Intel^(R) XeonTM processor for multiprocessor systems, and a new Intel Xeon processor for dual-processor servers and workstations with double the on-die cache of previous generations. In April, Microsoft introduced Windows* Server 2003 and SQL Server 2000, Enterprise Edition, further expanding the availability of enterprise software optimized for the Itanium processor family. In conjunction with the launch, Intel, Hewlett-Packard and Microsoft announced the world's highest single-system transaction processing performance result, obtained on a 64-way HP server based on the new Itanium 2 processor. Also in April, Intel, NEC and Microsoft announced the world's best

transaction processing performance result for a non-clustered, 32-way server based on the Itanium 2 processor.

In wireless networking, Intel announced plans to develop silicon products based on the 802.16a standard, a new technology that provides a wireless broadband alternative to cable and DSL. Networks based on the 802.16a standard are expected to transfer data over a range of up to 30 miles and, depending on the distance, at speeds up to 70 megabits per second.

In network processing, the company announced support for Advanced Switching, a standards-based extension of the PCI Express technology designed for the computing industry. In addition, Avici, Samsung and U.S. Robotics introduced new products based on Intel network processors during the quarter.

Intel advanced its optical strategy with the July acquisition of West Bay Semiconductor of Vancouver, which designs chips for transporting voice and data over SONET/SDH-based optical networks. Intel plans to combine the technology with its 90-nm manufacturing process to reduce the cost, power and complexity of optical networking equipment.

During the quarter, the company began shipping the Intel^(R) StrataFlashTM Wireless Memory, which brings higher storage densities, faster performance, and 1.8-volt operation to today's most advanced data phone designs. In addition, customer acceptance of Intel^(R) PCA cellular processors continued to grow, with more than 60 cumulative design wins in cellular phones and communications-enabled PDAs.

Intel and Sun Microsystems announced plans to optimize Java* technology for use on cell phones and PDAs powered by the Intel^(R) XScale^TM microarchitecture. The collaboration is expected to make it easier for device manufacturers to integrate Java applications into their devices and optimize the application performance. Intel also announced it is working with mmO2, one of Europe's leading wireless carriers, to optimize business and consumer applications for use on Intel PCA processor-based wireless devices.

Intel opened its newest development fab, D1D, in Hillsboro, Ore. The $2 billion, 300-mm facility will initially develop Intel's 65-nm process technology, which will be used to manufacture Intel's highest performance processors in the 2005 timeframe.

Intel will hold a public webcast at 2:30 p.m. PDT today on its Investor Relations Web site at www.intc.com. A replay of the webcast will be available until Oct. 14.

Intel, Pentium, Celeron, Intel Centrino, Itanium, Intel Xeon, Intel StrataFlash and XScale are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries.

*Other names and brands may be claimed as the property of others.