Intel employees apply their education, skills and experience to develop the next generation of technologies. We work to improve educational opportunities and increase access to technology worldwide.

Craig R. Barrett

2004 was a year of ups and downs for Intel and our industry. We had many successes, but also some fairly public product challenges. We took the time and effort in 2004 to refocus on our long-standing Intel Values and how they relate to our company's operational excellence.

I held a lot of frank conversations with our employees, and they engaged in our Intel practice of constructive confrontation by communicating very directly with me.

We took a hard look at ourselves through a formal self-assessment process and determined that we needed to take several steps. We must improve our understanding of what Intel Values and culture mean, and all of our employees must clearly understand the company's priorities and expectations. To accomplish this, we developed a new Managing for Excellence program to foster both upward and downward communication.

Intel business groups will be using this self-assessment as part of our quality management program. I believe that this will result in faster and more accurate information flow throughout the company, a better understanding of priorities among all employees and timely decision-making. These changes are not a "one-time thing"; they will be a permanent part of Intel's business processes, now and in the future.

Comprehensive view of corporate responsibility
One thing hasn't changed: our goal to model corporate responsibility in all of our actions and communications. As our competitors, stakeholders and employees continually raise the bar for performance, achieving excellence in corporate responsibility means more than publishing a report once a year.

Our vision and strategy are to drive increasing sustainability, taking into account not only economic but also environmental, community and workplace performance. Corporate responsibility is simply good management; it's not extra or superfluous. It needs to be embedded in the way we do business—in human resources; public affairs; purchasing; quality; investor relations; legal; environment, health and safety; and every other aspect of our corporate life. Corporate responsibility is firmly anchored in Intel Values and is integrated into our Corporate Business Principles.

Intel Values are the constant
2005 will be both a year of transition and a year of continuity. In addition to the business transitions I've mentioned, we will see some significant leadership transitions. As of May, I will move from CEO to Chairman of the Board. Andy Grove will no longer serve on our Board, but will assume the role of senior advisor to the Board and to senior management. Paul Otellini will move into the role of CEO.

These types of transitions at Intel are executed with forethought and planning. Among the three of us, we have nearly 100 years of experience at this company. In times of transition, we look to our values as the bedrock of our decision-making. Our stakeholders see the external signs of transition: growth in emerging markets and product transitions. But they should also see the continuity and constancy of our focus on corporate responsibility, which is illustrated by the content of this global corporate citizenship report.

A company's social responsibility profile would require an endless list of ingredients. To make our reporting more useful to our readers, we try to prioritize content based on the impact that these issues have on our society and the communities in which we operate.

Carrying our focus forward
We continue to focus our energies on improving our environmental and safety performance. While we have achieved notable successes in water use, waste recycling, employee safety and wellness, and building waste reduction goals into new manufacturing technologies, challenges remain in reducing air emissions and energy use.

We have brought our passion, technical savvy and experience to the task of improving education and fostering relationships worldwide with educators, governments and communities. Our education programs are now available in more than 50 countries, and in 2005, we will expand that reach by beginning initiatives in several new places around the world.

Our employees have tapped their knowledge and energy by getting involved, helping to solve problems and bringing benefits to the communities where they live and work.

On the policy and governance front, we have worked with several other technology companies to create and endorse a code of conduct for the electronics industry supply chain.

Perhaps most importantly, we've established accountability for corporate responsibility performance and reporting at the Board of Directors. We will discuss these subjects and more in this report.

We also face challenges. Upholding our culture, principles and expectations as we continue to serve growing markets in emerging economies takes diligent focus. Environmental and workplace safety performance is never just "good enough." Intel stakeholders insist that we do more than mind our own operations. They want us to help improve their communities, enhance their competitiveness and share our strengths to help them be more productive.

Many of the issues we work through with our stakeholders are complex and require continued focus year after year. For example, in 2004, we were involved in dialogues on topics ranging from supplier performance and lobbying strategy to energy and water use. I'm confident that during my transition to Intel's Chairman of the Board and Paul's transition to CEO, our commitment to excellence in corporate responsibility will remain. I've enjoyed the opportunity to see this discipline mature, and will continue to monitor our performance in my new role as Chairman.

This is Intel's fourth Global Citizenship Report. In what follows, we attempt to offer a balanced and reasonable presentation of our organization's economic, environmental and social performance in 2004, and outline our priorities for the future. We continue to publish this report in accordance with the Global Reporting Initiative* (GRI) 2002 Sustainability Reporting Guidelines, and will do so in the future.

In these pages, you will find a summary of our actions, initiatives, focus areas and performance data for 2004—an annual account of our performance as a global corporate citizen. I hope you will also sense a progression: building on past successes but always finding new challenges to work on as we go forward. 2004 had its high points and its challenges. The final week of the year brought tragedy to the Indian Ocean countries unlike anything witnessed previously. We can't predict everything we will face in 2005, but we do know that by staying true to our Intel Values, we will tackle those challenges as we have in the past—with an eye on the future.

I am proud of the way our employees have focused on helping Intel rebound during this trying year, and helping their communities become better places to live and work. We are prepared for the challenges ahead.