Technology Isn't Really The Problem
May 17th, 1999
In This Article
• Manufacturing at Root
of 'Microprocessor Flu'
• Set-Top Boxes:
Nat Semi's To Lose
• "You're Covering A
Dying Industry"
• Celeron Die Size
Headed For 80
Square MM
Although most of the San Francisco Bay Area is basking in spring's balmy weather, a nasty case of the microprocessor flu has stricken more than one Silicon Valley chip company. In recent weeks, National Semiconductor announced plans to amputate its PC chip business, while Integrated Device Technology went public with its own pleas for third-party assistance.
While IDT's troubles will affect only a small portion of the market, National's role has definitely shifted. For many, National will retreat further into its traditional role as a 'widget' supplier, one of the top manufacturers of analog and mixed-signal products, but lacking the public attention that PC microprocessors still command.
Symptoms Of A Bigger Problem
Nevertheless, the problems experienced by both National and IDT seem like symptoms of a more widespread condition: that manufacturing, not innovation, seems to be winning the day in the PC microprocessor market. National acquired Cyrix in 1996, after co-founder Jerry Rogers had assigned a separate design team to work on an integrated processor, later named the MediaGX.
Under National, the team designing a stand-alone processor would transfer its finished core over to the designers of the integrated chip, which would add peripherals such as core logic or some basic graphics. Since National intends to sell off the design team, which created its stand-alone microprocessors, the MII, the future of National's microprocessor product road map as well as its integrated products could be subject to dramatic change.
Most Likely Buyer: ST Microelectronics
The most likely buyer for the MII team and/or design seems like ST Microelectronics, which has historically served as a foundry and second-source option for several chip company, including Cyrix. ST's expertise in consumer electronics also leaves open the possibility that ST could outdo National in its integrated strategy. IBM Microelectronics, once a rumored suitor, just doesn't seem interested.
Ironically, National is left with an integrated product road map, which is anchored by the "MediaPC," supposedly all of the functions of a PC integrated onto a single chip. Since National is now concentrating upon the embedded set-top box market and not the PC, the chip as well as the 'MediaPC' name will probably require an overhaul.
>>>Set-Top Boxes: Nat Semi's To LoseManufacturing At Root Of 'Microprocessor Flu'
Set-Top Boxes: Nat Semi's To Lose
May 17th, 1999
In This Article
• Manufacturing At Root
of 'Microprocessor Flu'
• Set-Top Boxes:
Nat Semi's To Lose
• "You're Covering A
Dying Industry"
• Celeron Die Size
Headed For 80
Square MM
When I interviewed Steve Tobak, vice-president of corporate marketing for National, he said the set-top box market was, from National's perspective, "ours to lose."
The field may be bigger than he thinks. Executives at Via Technologies, a maker of PC core logic chip sets, have already expressed interest in bolting on a microprocessor core to their core logic. And if I heard National chief Brian Halla correctly on a conference call, Intel's "Timba" integrated chip will appear sometime next year. Meanwhile, there's a host of embedded chips from Motorola, ARM, and MIPS that aren't going to just give in.
Meanwhile, IDT's own WinChip microprocessor has been characterized by some analysts as little more than an enhanced 486 core, with significant cache additions to improve its performance. The first-generation WinChip was relegated to the low-cost overseas market because of its low performance; the WinChip 2 is now sold in the United States, but only to third-tier OEMs and distributors.
Low Rung Of The PC MPU Market
National and IDT represent two of the three companies on the lowest rung of the PC microprocessor market. In the first quarter of 1999, National's unit market share was under 6 percent, while IDT slipped to a meager 0.6 percent of the total market, according to Mercury Research, in Scottsdale, Ariz.
The reason for this low market share is part of the vicious cycle of manufacturing. Since both companies have had problems manufacturing chips at high enough speeds to win customers, demand has weakened and the manufacturing sites or 'fabs' are not run at full capacity. As sales dried up, so did the additional funds needed to shore up the company's market position. As a corollary effect, both IDT and Cyrix have found it difficult to fight their way out of a sub-$600 PC into a higher-cost product.
About a week ago, I sat down with a venture capitalist who used to track Intel for a prominent securities house. After describing his company's investments into so-called "infrastructure plays," "intellectual-property licensing company like Rambus," he asked me about the types of companies I cover. After I ran down a list of PC microprocessor, multimedia, and storage companies, he looked at me incredulously.
>>>"You're Covering A Dying Industry" |
