Intel postpones California building

Intel (INTC) will delay construction of an office building at its Folsom, California, site, as the company adjusts to a more severe business climate than previously anticipated.

The central California site includes Intel's Peripheral Component Interconnect (PCI) components division, flash memory products division, and math co-processors and microprocessor upgrade products division, among other businesses.

An Intel spokesperson said this is happening in the light of first-quarter earnings falling below expectations, which Intel announced in earlier this month. "This is a prudent precaution considering current business conditions," the spokesperson said.

Buildings such as this typically hold about 1,000 people, he said, adding that that this should not necessarily be linked to a freeze on hiring since existing buildings could accommodate new hires. Buildings like this can cost as much as $55 million, he pointed out.

At some point the company will likely reschedule construction of the building, according to Intel.

In March, the chip giant said it expects revenues to fall approximately 10 percent below earlier projections of $6.5 billion in revenue. This pegs first quarter revenue at $5.9 billion, a significant downturn from the fourth quarter and year-ago figures, which both came in around $6.5 billion.

Last week, Intel pushed back the opening of a microprocessor production plant outside Fort Worth, Texas, calling for a complete halt to construction of a $1.3 billion facility that was originally slated to open in 1999.

Both slackening chip demand and the desire to get ahead of the industry's ever-quickening product cycle were seen as factors in Intel's decision. Intel says the Texas plant will come online in 2002 with a manufacturing process that's two generations in the future.

Intel is an investor in CNET: The Computer Network.