Intel's Chief On His $7 Billion Bet

Intel Chief Executive Paul Otellini

Boldness has always been part of Intel's DNA. In 1965, co-founder Gordon Moore predicted that the number of transistors that could in a cost-effective manner be put on an integrated circuit would increase exponentially, setting the pace for the computer industry for decades to come. In the mid-1980s, Moore and then company President Andrew Grove killed Intel's biggest business--computer memory--in order to place the risk-it-all bet that turned it into the world's largest manufacturer of microprocessors.

Now, with the global economy facing its darkest days since the 1930s, Chief Executive Paul Otellini says he will spend around $7 billion over the next two years to upgrade Intel (nasdaq: INTC - news - people )'s factories--or fabs--to crank out processors built from even smaller transistors.

Otellini has decided to hustle to market a new generation of affordable mass-market processors, code-named Westmere. "One of the best ways to use this kind of capacity is for what I call a 'square-wave transition,' to bring massive amounts of new technology at a great price point," Otellini told Forbes. Here are edited excerpts from his interview.