Chip giant Intel last night reported sharply lower profits for the fourth quarter but beat market expectations. The company said a pick-up in PC sales over Christmas helped raise profit and sales at the world's largest maker of semiconductors.

But the company is no nearer a decision on when to restart construction on its $2 billion Fab 24 facility at its Leixlip, Co Kildare plant. And the company was marked down together with rivals in the wake of the results after it announced it would cut back on capital spending in 2002.

A spokeswoman for Intel's Irish operations said: "Intel will continue to operate prudently and will only commit expenditures which are necessary." She said all aspects of the Fab 24 project were being reviewed with a particular emphasis on cost.

The company is now unlikely to meet its earlier target of recommmencing construction before the end of March.

Excluding acquisition-related items, Intel had a profit of $998 million, or 15 US cents a share, in the fourth quarter compared with $2.63 billion, or 38 US cents a share, in the fourth quarter of 2000. Sales fell to $6.98 billion from $8.7 billion. Analysts had forecast earnings per share of 11 US cents with sales of $6.84 million.

Mr Andy Bryant, Intel's chief financial officer, said: "2001 is easily the worst recession this industry has ever seen," adding that he believed the company gained 1 to 2 percentage points of market share during the quarter, principally at the expense of Advanced Micro Devices.

Intel also said it expected first-quarter sales to be flat or lower - it gave a range of $6.4 billion to $7 billion - in line with most analysts' forecasts. It expects spending on capital expenditures, a closely watched figure by the semiconductor industry, to be $5.5 billion in 2002, down from about $7.3 billion in 2001, sparking investor fears that a rebound, expected sometime this year, might be later rather than sooner.

"We knew they were coming down, but that's really sharp," said Banc of America Securities analyst Mr Mark FitzGerald. Mr FitzGerald had forecast Intel would cut its spending to $6.5 billion.

Intel expects to invest more than $100 million this year in upgrading existing facilities at Leixlip with little change in the 3,150 people employed.

The spokeswoman said she expected the situation with regard to the Fab 24 project to become clearer later in the current quarter, which ends in March. "This project represents a massive investment and we cannot afford an investment of this order to remain idle while we await an upturn in demand. Similarly, we do not want to miss the that pick-up. "It is very hard to predict," she said. "There is a lot of uncertainty in the market." But she insisted that Intel remained committed to the project.

Intel's chief executive, Mr Craig Barrett, said that, despite the difficulties of 2001, he would not want to change places with any other company. "Our 2001 research and development and manufacturing investments position us to grow faster than the industry when the high tech recovery occurs," he said.

Intel's planned $2.2 billion expansion at its facility in Leixlip has been delayed twice since it was first announced in June 2000.

Just two months after gaining planning permission, Intel decided to upgrade the production process at the proposed facility pushing its completion date back by six months to mid-2002.

Difficulties in Intel's core processor market caused the firm to announce a further delay in the facility resulting in the loss of 1,400 construction jobs just three months later in March 2001.

At the time the company said it was still committed to the project but that the facility was not expected to begin production by mid-2003. Last October it told The Irish Times it would restart construction at the new facility by the end of the first quarter 2002.

The new building, known as Fab 24, was the first Intel site expected to use 0.10 micron technology and 300mm wafers in the manufacture of its computer processors. This technology dramatically increases the efficiency of manufacturing computer chips by increasing the number of processors that can be made on an individual wafer.

Mr Andrew Norwood, a senior analyst with research firm Gartner Dataquest, said in terms of revenue slide, the semiconductor industry had now hit the bottom and there were certain signs the market was beginning to grow.