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March 06, 2004

Where is Intel Capital headed

Though it has earned $3 billion on its investment portfolio over its 13-year history, Intel Capital lost $1.1 billion over the last three years. But no one at chip giant Intel Corp. is complaining about the hit caused to the company's earnings by its VC arm, says a BusinessWeek article. Why? "Intel Capital's real job is to help sell chips, not rack up investment returns. The idea is that if certain technologies take off because young companies invent cool new gear, a lot of that gear will need Intel semiconductors. Even if the gear doesn't, it'll boost demand for more powerful PCs and servers that run on Intel chips," the article adds.

The 200-person Intel Capital invested $700 million in 120 deals in 2003. Almost $575 million went into two companies--Micron Technology and Elpida Memory--developing next-generation memory chips. "Intel needs faster PC memory to clear a potential logjam in delivering movies and other digital content in PCs and home networks. If consumers like the idea, Intel will cash in as more homes add second PCs," the BW report adds.

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