Intel Obliged to Lower NAND Flash Prices

Intel
Corporation lowered its first-quarter gross margin forecast to 54
percent, plus or minus a point, as compared to the previous forecast of
56 percent, plus or minus a couple of points, due to lower than
expected prices for NAND flash memory chips. All other expectations are
consistent with the first quarter Business Outlook published in the
company’s fourth quarter 2007 earnings release.

Status of Business Outlook
During the quarter, Intel’s corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment
analysts, the media and others. From the close of business on March 7
until publication of the company’s first-quarter 2008 earnings release,
Intel will observe a "Quiet Period" during which the Business Outlook
disclosed in the company’s press releases and filings with the SEC
should be considered to be historical, speaking as of prior to the
Quiet Period only and not subject to an update by the company.

Risk Factors
The above statements and any others in this document that refer to
plans and expectations for the first quarter and the future involve a
number of risks and uncertainties. Many factors could cause Intel’s
actual results to differ materially from current expectations,
including the following:

• Changes in business and economic conditions, including
  conditions in the credit market that could affect consumer confidence;
  customer acceptance of Intel’s and competitors’ products; changes in
  customer order patterns, including order cancellations; and changes in
  the level of inventory at customers. Intel’s results could be affected
  by the timing of closing of acquisitions and divestitures.
• Intel operates in intensely competitive industries that are
  characterized by a high percentage of costs that are fixed or difficult
  to reduce in the short term and product demand that is highly variable
  and difficult to forecast. Additionally, Intel is in the process of
  transitioning to its next generation of products on 45nm process
  technology, and there could be execution issues associated with these
  changes, including product defects and errata along with lower than
  anticipated manufacturing yields. Revenue and the gross margin
  percentage are affected by the timing of new Intel product
  introductions and the demand for and market acceptance of Intel’s
  products; actions taken by Intel’s competitors, including product
  offerings and introductions, marketing programs and pricing pressures
  and Intel’s response to such actions; Intel’s ability to respond
  quickly to technological developments and to incorporate new features
  into its products; and the availability of sufficient components from
  suppliers to meet demand.
• The gross margin percentage could vary significantly from
  expectations based on changes in revenue levels; product mix and
  pricing; capacity utilization; variations in inventory valuation,
  including variations related to the timing of qualifying products for
  sale; excess or obsolete inventory; manufacturing yields; changes in
  unit costs; impairments of long-lived assets, including manufacturing,
  assembly/test and intangible assets; and the timing and execution of
  the manufacturing ramp and associated costs, including start-up costs.
• Expenses, particularly certain marketing and compensation
  expenses, vary depending on the level of demand for Intel’s products,
  the level of revenue and profits, and impairments of long-lived assets.
• Intel is in the midst of a structure and efficiency program
  that is resulting in several actions that could have an impact on
  expected expense levels and gross margin. Intel is also in the midst of
  forming Numonyx, a private, independent semiconductor company, together
  with STMicroelectronics N.V. and Francisco Partners L.P. A change in
  the financial performance of the contributed businesses could have a
  negative impact on our financial statements. Intel’s equity proportion
  of the new company’s results will be reflected on its financial
  statements below operating income and with a one quarter lag. The
  results could have a negative impact on Intel’s overall financial
  results.
• The tax rate expectation is based on current tax law and
  current expected income. The tax rate may be affected by the
  jurisdictions in which profits are determined to be earned and taxed;
  changes in the estimates of credits, benefits and deductions; the
  resolution of issues arising from tax audits with various tax
  authorities, including payment of interest and penalties; and the
  ability to realize deferred tax assets.
• Gains or losses from equity securities and interest and
  other could vary from expectations depending on fixed income and equity
  market volatility; gains or losses realized on the sale or exchange of
  securities; gains or losses from equity method investments; impairment
  charges related to marketable, non-marketable and other investments;
  interest rates; cash balances; and changes in fair value of derivative
  instruments.
• Intel’s results could be affected by the amount, type, and
  valuation of share-based awards granted as well as the amount of awards
  cancelled due to employee turnover and the timing of award exercises by
  employees.
• Intel’s results could be impacted by adverse economic,
  social, political and physical/infrastructure conditions in the
  countries in which Intel, its customers or its suppliers operate,
  including military conflict and other security risks, natural
  disasters, infrastructure disruptions, health concerns and fluctuations
  in currency exchange rates.

Intel
Corporation