Intel Second-Quarter Revenue $8.05 Billion

[The Wise One]

Earnings Per Share 27 Cents

SANTA CLARA, Calif., July 13, 2004 - Intel Corporation today announced second-quarter revenue of $8.05 billion, approximately flat sequentially and up 18 percent year-over-year.

Second-quarter net income was $1.8 billion, flat sequentially and up 96 percent year-over-year. Earnings per share were 27 cents, up 4 percent sequentially and up 93 percent from 14 cents in the second quarter of 2003.

"Intel continued to post strong year-over-year results in the second quarter as our microprocessor business followed seasonal trends and our communications business grew nicely, led by flash memory," said Intel CEO Craig R. Barrett. "We had a notable quarter with respect to new product launches with the introduction of 90 nm processors for mobile and the enterprise market segment along with our Grantsdale chipset for the desktop which delivers some of the most significant PC platform enhancements in a decade. Looking to the second half, we will use our investments in leading-edge capacity to drive growth in our core microprocessor business and expand our presence in chipsets, flash and other communications products."

Intel's second-quarter results included a previously disclosed $62-million reversal of previously accrued taxes primarily related to the closing of a state income tax audit, as well as an adjustment to the effective tax rate. These items increased second-quarter earnings-per-share by 1.7 cents. Intel's first-quarter results included a legal settlement charge that reduced earnings per share by 1.7 cents.

BUSINESS OUTLOOK

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Please see the Risk Factors Regarding Forward-Looking Statements in this release for a description of certain risk factors that could cause actual results to differ, and refer to Intel's annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of the risks. These statements do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after July 12.

** Revenue in the third quarter is expected to be between $8.6 billion and $9.2 billion.

** Gross margin percentage in the third quarter is expected to be approximately 60 percent, plus or minus a couple of points. 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.

** The gross margin percentage for 2004 is now expected to be 60 percent, plus or minus a couple of points, as compared to the previous expectation of 62 percent, plus or minus a few points. The company expects faster growth in products such as flash memories, chipsets and motherboards that have lower margins. In addition, Intel expects microprocessor margins to increase at a rate slower than previously expected due to a slight reduction in microprocessor average selling prices and a slower than expected reduction in microprocessor unit costs.

** Expenses (R&D plus MG&A) in the third quarter are expected to be approximately $2.5 billion. Expenses, particularly certain marketing- and compensation-related expenses, vary depending on the level of revenue and profits.

** The R&D spending expectation for 2004 is unchanged at approximately $4.8 billion.

** The capital spending expectation for 2004 is unchanged at between $3.6 billion and $4.0 billion.

** Gains from equity investments and interest and other in the third quarter are expected to be approximately $50 million.

** The tax rate for the third quarter is now expected to be approximately 31 percent, as compared to the previous expectation of approximately 32 percent, primarily due to an increase in the estimated tax benefit for export sales. The tax rate expectation is based on current expected income and assumes Intel continues to receive tax benefits for export sales. The tax rate may be affected by changes in tax law, the closing of acquisitions or divestitures, the jurisdiction in which profits are determined to be earned and taxed, the resolution of issues arising from tax audits with various tax authorities, and the ability to realize deferred tax assets.

** Depreciation is expected to be between $1.1 billion and $1.2 billion in the third quarter and approximately $4.6 billion for the year.

** Amortization of acquisition-related intangibles and costs is expected to be approximately $40 million in the third quarter and approximately $175 million for the full year.

[The Wise One]

SECOND-QUARTER REVIEW AND RECENT HIGHLIGHTS

Financial Review
** The gross margin percentage for the second quarter was 59.4 percent, below the revised expectation of between 60 percent and 61 percent due to an unanticipated $38-million charge for a chipset manufacturing excursion that occurred late in the quarter and revenue being slightly below the midpoint of the updated range.

** Gains from equity investments and interest and other in the quarter were $39 million, below the previous expectation of approximately $60 million, primarily due to higher than expected impairments.

** The effective tax rate for the quarter was 27.4 percent including the $62-million reversal of previously accrued taxes and an adjustment for an increase in the estimated tax benefit for export sales.

** Inventory levels grew by approximately $427 million during the quarter, with approximately half of the increase coming from microprocessor inventories, and the balance primarily from flash memory and chipset inventories.

Key Product Trends (Sequential)
** Intel Architecture microprocessor units were lower. The average selling price was just below the first-quarter level.

** Chipset units were higher.

** Motherboard units set a record.

** Flash memory units were significantly higher.

** Connectivity product units set a record.

Intel Architecture Business
During the quarter, Intel introduced 22 microprocessors built on 90 nm lithography and 300 mm wafers, as well as the first chipsets using the company's 130 nm technology. The introductions bring new microprocessor and platform technology to a wide range of desktop, notebook, workstation and server systems.

For the desktop, Intel introduced a new family of chipsets designed to help make home PCs more entertaining and business PCs more productive and secure. Formerly code-named Grantsdale and Alderwood, the Intel® 915 G/P and 925X Express chipsets deliver some of the most significant PC platform enhancements in a decade, including support for high-definition video, 7.1 surround sound audio and dual displays. Intel also introduced six Pentium® 4 processors with Hyper-Threading (HT) technology that can be used with the new chipsets to help users better enjoy digital music, photos, videos and games on the PC. The company also introduced four Celeron® D processors for value desktop systems.

In mobile, the company launched new Intel® Pentium® M processors designed to boost the performance of wireless-enabled notebooks based on Intel® Centrino™ mobile technology. Formerly code-named Dothan, the processors include new design features such as increased on-die cache memory that enhance the way wireless notebook users work, learn, play and communicate. The company also introduced several Mobile Intel® Pentium® 4 processors for desktop-equivalent notebooks and a Celeron® M processor for value notebooks.

For the enterprise, Intel introduced new Intel® Xeon® processors, formerly code-named Nocona, which together with the Intel® E7525 chipset bring new capabilities and performance levels to workstations. The platforms support HT Technology, an 800 MHz system bus, PCI Express graphics and I/O, DDR2 memory, 64-bit memory extension technology for working with data sets greater than 4 GB, and Demand Based Switching with enhanced Intel® SpeedStep® technology for lower power consumption. Server platforms based on the new Intel Xeon processors are expected to be introduced during the third quarter.

The Itanium® 2 processor continued to gain acceptance in commercial IT deployments at companies including The Body Shop, Procter & Gamble and Volvo. Software availability for the Itanium processor grew with the commercial release of SAS* 9 business intelligence software optimized for Itanium 2-based servers. Intel showed the first wafers of a next-generation Itanium processor code-named Montecito that contains 1.7 billion transistors. Montecito is expected to deliver up to twice the performance of current Itanium processors and is scheduled to be the company's first dual-core processor when introduced in 2005.

In high-performance computing, the Top500* ranking for June reported that more than half of the world's 500 fastest supercomputers are based on Intel Xeon and Itanium 2 processors, up from just one Intel-based system in the June 2001 ranking. The Itanium-based "Thunder" system at the Lawrence Livermore National Laboratory was ranked second fastest in the world.

[The Wise One]

Intel Communications Group
In flash, the company increased shipments of its 1.8-volt Intel® StrataFlash® wireless memory optimized for cellular devices and expanded its product offerings into the "broad market" segment for flash in products such as set-top boxes, communications equipment and many other embedded systems.

In communications infrastructure, Huawei Technologies and Korea Telecom adopted Intel-based modular communications solutions in forthcoming products. The new equipment will use standards-based AdvancedTCA* system technology along with carrier grade Linux*. Intel also introduced a 1U carrier grade server and announced new versions of its Pentium M, Ultra Low Voltage Celeron M, and Intel® PXA270 processors for use in communications infrastructure and other embedded applications.

In wireless networking, Intel and Proxim announced plans to develop WiMAX base stations and customer premise equipment for fixed and portable access. Intel announced agreements with the municipalities of Dalian and Chengdu to help bring WiMAX connectivity to Internet users in these Chinese cities. In wireline networking, Intel introduced a server adapter that provides the low cost, small form factor and multimode fiber capabilities needed to bring 10-gigabit Ethernet connectivity to the data center.

In applications processing, customers including Dell Computer and palmOne introduced personal digital assistants based on the recently announced Intel® PXA27X processor family, formerly code-named Bulverde.

Technology and Manufacturing Group
Intel's transition to 90 nm, 300 mm silicon technology made continued progress during the quarter, with further yield increases and a crossover with 130 nm microprocessor fabrication volumes. The company expects a crossover in total microprocessor shipments during the third quarter and anticipates that the vast majority of its microprocessor shipments will be converted to 90 nm technology by the end of the year. Intel also plans to begin production of the company's first 90 nm flash products on 200 mm technology during the third quarter.

Intel announced the start of production at Fab 24 in Ireland, the company's third factory capable of producing 90 nm processors on 300 mm wafers. The company also announced plans to invest an additional $2 billion in its Irish facilities to expand clean room capacity and enable 65 nm manufacturing at Fab 24 along with a planned expansion called Fab 24-2.

Intel announced that it has begun a $2 billion construction project to convert Fab 12, a 200 mm wafer fabrication facility in Chandler, Ariz., to a 300 mm facility for initial use in 65 nm production. The project is scheduled to be completed in late 2005.

EARNINGS WEBCAST
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. 12.

STATUS OF BUSINESS OUTLOOK AND MID-QUARTER BUSINESS UPDATE
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. 2. From the close of business on Aug. 27 until publication of the Update, Intel will observe a "Quiet Period" during which the Business Outlook disclosed in the company's press releases and 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 Business Outlook, Update and related Quiet Periods, please refer to the Business Outlook section of Intel's Web site at www.intc.com.

RISK FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The statements in this document that refer to plans and expectations for the third quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. A number of factors in addition to those discussed above could cause actual results to differ materially from expectations. Demand for Intel's products, which impacts revenue and the gross margin percentage, is affected by business and economic conditions, as well as computing and communications industry trends, and changes in customer order patterns. Revenue and the gross margin percentage are affected by competing chip architectures and manufacturing technologies, competing software-compatible microprocessors, pricing pressures and other competitive factors, as well as market acceptance of Intel's new products, the availability of sufficient inventory to meet demand, the availability of externally purchased components or materials, and the development and timing of introduction of compelling software applications and operating systems that take advantage of the features of Intel's products. Future revenue is also dependent on continuing technological advancement, including developing and implementing new processes and strategic products, as well as the timing of new product introductions, sustaining and growing new businesses and integrating and operating any acquired businesses. The gross margin percentage could also be affected by the execution of the manufacturing ramp, including the ramp of 90 nm process technology on 300 mm wafers, excess manufacturing capacity, excess or obsolete inventory, variations in inventory valuation and impairment of manufacturing or assembly and test assets. Intel conducts much of its manufacturing, assembly and test, and sales activities outside the United States and is thus subject to a number of other factors, including currency controls and fluctuations, tariff and import regulations, and regulatory requirements which may limit Intel's or its customers' ability to manufacture, assemble and test, design, develop or sell products in particular countries. If terrorist activity, armed conflict, civil or military unrest or political instability occurs in the United States, Israel or other locations, such events may disrupt manufacturing, assembly and test, logistics, security and communications, and could also result in reduced demand for Intel's products. The impacts of major health concerns or of large-scale outages or interruptions of service from utility or other infrastructure providers, on Intel, its suppliers, customers or other third parties could also adversely affect Intel's business and impact customer order patterns. The expectation regarding gains or losses from equity securities and interest and other assumes no unanticipated events and varies depending on equity market levels and volatility, gains or losses realized on the sale or exchange of securities, impairment charges related to non-marketable and other investments, interest rates, cash balances, and changes in fair value of derivative instruments. Expectations of impairment charges on investments are based on experience, and it is not possible to know which specific investments are likely to be impaired or the extent or timing of individual impairments. Results could also be affected by adverse effects associated with product defects and errata (deviations from published specifications), and by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust and other issues, such as the litigation and/or regulatory matters described in Intel's SEC reports, as well as other risk factors listed in Intel's SEC reports, including the report on Form 10-Q for the quarter ended March 27.

Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at www.intel.com/pressroom.

Intel, Pentium, Celeron, Intel Centrino, Intel Xeon, Intel SpeedStep, Itanium and Intel StrataFlash are marks 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.

[The Wise One]

INTEL CORPORATION CONSOLIDATED SUMMARY INCOME STATEMENT DATA (In millions, except per share amounts)
			Three Months Ended				Six Months Ended
			June 26,		June 28,		June 26,		June 28,
			2004		2003		2004		2003
NET REVENUE			$ 8,049		$ 6,816		$ 16,140		$ 13,567
Cost of sales			3,269		3,348		6,490		6,587
GROSS MARGIN			4,780		3,468		9,650		6,980
Research and
	development		1,186		1,029		2,381		2,048
Marketing, general
	and administrative		1,170		1,073		2,311		2,091
Impairment of
	goodwill		-		6		-		6
Amortization of
	acquisition-related
	intangibles and costs		43		84		101		168

[The Wise One]

OPERATING
	EXPENSES		2,399		2,192		4,793		4,313
OPERATING
	INCOME		2,381		1,276		4,857		2,667
Gains (losses) on equity
	securities, net		(8)		(58)		11		(185)
Interest and other, net			47		53		96		105
INCOME BEFORE
	TAXES		2,420		1,271		4,964		2,587
Income taxes			663		375		1,477		776
NET INCOME			$ 1,757		$ 896		$ 3,487		$ 1,811

[The Wise One]

BASIC EARNINGS
	PER SHARE		$ 0.27		$ 0.14		$ 0.54		$ 0.28
DILUTED EARNINGS
	PER SHARE		$ 0.27		$ 0.14		$ 0.53		$ 0.27
COMMON SHARES
	OUTSTANDING		6,449		6,525		6,464		6,540
COMMON SHARES
	ASSUMING
	DILUTION		6,558		6,580		6,591		6,595

[The Wise One]

INTEL CORPORATION CONSOLIDATED SUMMARY BALANCE SHEET DATA (In millions)
				June 26,		March 27,		Dec. 27,
				2004		2004		2003
CURRENT ASSETS
Cash and short-term
	investments			$ 14,264		$ 13,146		$ 13,539
Trading assets				2,708		2,572		2,625
Accounts receivable				3,183		3,374		2,960
Inventories:
		Raw materials		395		355		333
		Work in process		1,912		1,682		1,490
		Finished goods		916		759		696

[The Wise One]

		3,223		2,796		2,519
Deferred tax assets
	and other			1,380		1,203		1,239
	Total current assets			24,758		23,091		22,882
Property, plant and
	equipment, net			16,007		16,192		16,661
Marketable strategic
	equity securities			582		608		514
Other long-term
	investments			2,238		2,043		1,866
Goodwill				3,730		3,705		3,705
Other assets				1,357		1,449		1,515
	TOTAL ASSETS			$ 48,672		$ 47,088		$ 47,143

[The Wise One]

CURRENT
	LIABILITIES
Short-term debt				$ 216		$ 296		$ 224
Accounts payable and
	accrued liabilities			5,253		4,928		5,237
Deferred income
	on shipments to
	distributors			640		701		633
Income taxes payable				1,429		491		785
	Total current liabilities			7,538		6,416		6,879

[The Wise One]

LONG-TERM DEBT				898		927		936
DEFERRED TAX
	LIABILITIES			1,643		1,635		1,482
STOCKHOLDERS'
	EQUITY			38,593		38,110		37,846
	TOTAL LIABILITIES
		AND
		STOCKHOLDERS'
		EQUITY		$ 48,672		$ 47,088		$ 47,143

[The Wise One]

INTEL CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION (In millions)
			Q2 2004	Q1 2004	Q2 2003
GEOGRAPHIC
	REVENUE:
	Americas		$1,956	$2,163	$1,955
			24%	27%	28%
	Asia-Pacific		$3,661	$3,284	$2,778
			45%	40%	41%
	Europe		$1,665	$1,927	$1,418
			21%	24%	21%
	Japan		$767	$717	$665
			10%	9%	10%

[The Wise One]

ADDITIONAL REVENUE-RELATED
	INFORMATION:
Intel Architecture business
	microprocessor revenue		$5,751	$5,980	$4,844
Intel Architecture business chipset,
	motherboard and other revenue		$1,023	$1,045	$1,006
Flash revenue			$587	$417	$411
CASH INVESTMENTS:
Cash and short-
	term investments		$14,264	$13,146	$11,202
Trading assets -
	fixed income (1)		$2,390	$2,265	$2,162
Total cash investments			$16,654	$15,411	$13,364

[The Wise One]

INTEL CAPITAL PORTFOLIO:
Marketable strategic
	equity securities		$582	$608	$63
Other strategic investments			$640	$680	$735
Total Intel Capital portfolio			$1,222	$1,288	$798
TRADING ASSETS:
Trading assets -
	equity securities
	offsetting deferred
	compensation (2)		$318	$307	$272
Total trading assets -
	sum of 1+2		$2,708	$2,572	$2,434
SELECTED CASH
	FLOW
	INFORMATION:
Depreciation			$1,151	$1,140	$1,162
Impairment of
	goodwill		$0	$0	$6
Amortization of acquisition-
	related intangibles
	& costs		$43	$58	$84
Capital spending			($1,026)	($680)	($923)
Stock repurchase
	program		($1,511)	($1,505)	($1,006)

[The Wise One]

Proceeds from sales
	of shares to
	employees, tax
	benefit & other		$258	$490	$166
Dividends paid			($258)	($259)	($131)
Net cash used
	for acquisitions		($33)	$0	$0
SHARE INFORMATION:
Average common shares
	outstanding		6,449	6,480	6,525
Dilutive effect of
	stock options		109	144	55
Common shares
	assuming dilution		6,558	6,624	6,580
STOCK BUYBACK:
	Shares repurchased		56.0	49.2	51.8
	Shares authorized
		for buyback	2,300.0	2,300.0	2,300.0
	Cumulative shares
		repurchased	(1,991.2)	(1,935.2)	(1,824.6)
	Shares available
		for buyback	308.8	364.8	475.4
OTHER INFORMATION:
Employees (in thousands)			81.7	80.5	78.7
Days sales outstanding			36	36	36

[The Wise One]

INTEL CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION ($ in millions)
		Q2 2004	Q1 2004	YTD 2004	Q2 2003	YTD 2003
OPERATING SEGMENT
INFORMATION:
Intel Architecture
Business
	Revenue	6,774	7,025	13,799	5,850	11,622
	Operating income	2,788	3,008	5,796	1,829	3,734
Intel Communications
Group
	Revenue	1,271	1,065	2,336	957	1,920
	Operating loss	(126)	(219)	(345)	(255)	(473)
All Other
	Revenue	4	1	5	9	25
	Operating loss	(281)	(313)	(594)	(298)	(594)
Total
	Revenue	8,049	8,091	16,140	6,816	13,567
	Operating income	2,381	2,476	4,857	1,276	2,667