Intel Atom sells much better than expected

Intel's Atom processors have been off to a great start, beating initial expectations. According to Chief Financial Officer Stacy Smith in an interview posted on InformationWeek, the processors are used in small electronic gadgets or small PC's. The success of the processor is welcomed news for a company that has been affected by the slowing market of personal computers. "It's the perfect recession product to have in the marketplace" Smith said Tuesday.

Atom processors are designed for low-cost devices Intel calls "Mobile Internet Devices." Consumers' tendency to tighten budgets recently may factor in the strong sales for lower cost computing devices. Many companies are releasing mini-notebooks this year, some of them fitted with Atom processors. Manufacturers have pushed these devices with new marketing campaigns, anticipating the possibility of strong sales.

The success of Intel's target segment remains to be seen, many of these products being new and the market itself just emerging. Intel is aware of the uncertainty, Smith adding "we'll know kind of in six months how much of this demand (for Atom) is real and how much is customers thinking they're going to win in the market place and double-ordering."

Smith claimed they can produce roughly 2500 Atom chips from a single silicon wafer. Atom chips will not be as profitable as their Core or Xeon chip, but they claim the profit is still healthy. Smith does not anticipate the Atom chips cannibalizing the market for their other chips except for a part of their low-cost Celeron processor market. Intel has not changed their third quarter revenue forecast from the original estimate of 10.0 billion to 10.6 billion. Smith indicated confidence that Intel has positioned itself well for the current economic situation, adding "Even in the downturn, we're seeing investments in technology continue."