Our future results of operations and the topics of other forward-looking statements contained in this Form 10-K, including this MD&A, involve a number of risks and uncertainties—in particular, our goals and strategies; new product introductions; plans to cultivate new businesses; pending divestitures; future economic conditions; revenue; pricing; gross margin and costs; capital spending; depreciation; R&D expenses; marketing, general and administrative expenses; potential impairment of investments; our effective tax rate; pending legal proceedings; net gains (losses) from equity investments; and interest and other, net. Our future results of operations may also be affected by the amount, type, and valuation of share-based awards granted as well as the amount of awards cancelled due to employee turnover and the timing of award exercises by employees. We are focusing on efforts to improve operational efficiency and reduce spending that may result in several actions that could have an impact on expense levels and gross margin. In addition to the various important factors discussed above, a number of other important factors could cause actual results to differ materially from our expectations. See the risks described in "Risk Factors" in Part I, Item 1A of this Form 10-K.

Our expectations for 2008 are as follows:

• Gross margin: 57% plus or minus a few points. The 57% midpoint is higher than our 2007 gross margin of 51.9%, primarily due to expected lower unit costs and lower start-up costs, and to a lesser extent, the divestiture of lower margin businesses.
• Capital spending: approximately $5.2 billion, plus or minus $200 million, compared to $5.0 billion in 2007.
• Depreciation: approximately $4.4 billion, plus or minus $100 million, compared to $4.5 billion in 2007.
• Total spending: spending on R&D, plus marketing, general and administrative expenses in 2008 is expected to be approximately $11.4 billion. The expectation for total spending in 2008 is higher than our 2007 spending of $11.2 billion, as process development engineers transition from 45nm start-up activities to 32nm development, causing a movement of spending from cost of sales to R&D.
• Research and development spending: approximately $5.9 billion.
• Tax rate: approximately 31%. The estimated effective tax rate is based on tax law in effect at December 29, 2007 and current expected income.