Santa Clara (CA) - Intel announced solid quarter results with sharply increased revenues and earnings. The company said the ramp of dual-core processors has begun with "100,000s" of Smithfield parts shipping this quarter and "millions" until the end of this year - representing just a small fraction of the total market. Intel expects dual-core processors to remain largely a chip for power and workstation users initially.

Intel’s first quarter results hit the high-end of previous estimates. Revenues were $9.4 billion, up 17 percent form the first quarter 2004 ; net-income jumped 25 percent to $2.2 billion in the same time frame. Sequential growth was mixed with a one percent decline in processor sales to $6.9 billion, flat chipset and motherboard sales of $2 billion and a decline in Flash sales of 10 percent down to $578 million.

Revenues and earnings clearly beat analyst’s expectations, mainly driven by the mobile unit at Intel and growing sales of mobile processors, chipsets, WLAN products and application processors for 2.5G and 3G cellphones, according to Paul Otellini, Intel’s president.

On the processors side, Intel said preparations for the shift to a 65 nm manufacturing process are going well with a stronger than anticipated demand for such processors. Otellini said the company intends to quickly ramp dual-core processors with the introduction of the 65 nm Presler (desktop), and Yonah (notebook). He did not provide much detail on increasing the manufacturing capacity for the 90 nm Pentium Extreme Edition 840 and the upcoming Pentium D, but said production will be in the "100,000s" this quarter and will be in the "millions" by the end of the year. That may sound much, but given the fact the industry sells nearly 200 million PC processors every year, Intel’s dual-core chips will remain a rare sight throughout this year.

Otellini justified the somewhat low production numbers with Intel’s expectation that mainly power users and workstation professionals will be interested in the processors - due to the lack of multi-threaded applications on the market. According to George Alfs, spokesman for Intel, the company believes especially the $999 Extreme Edition to be in a "good balance between supply and demand". Demand for the more mainstream-priced Pentium D however would be hard to predict and Intel could react with higher production numbers, in case demand will outpace supply.

Market experts do not believe that Intel will run into shortages with the 800-series. "Intel can adjust pricing and production capacity and control," said Martin Reynolds, an analyst for market research firm Gartner. He also said that Intel’s production forecasts are "traditionally very conservative" and he would estimate dual-core processor numbers to be in the range of "10 to 20 million" for 2005.