Intel cancels Timna chip production
By Tom Foremski in San Francisco
Published: September 29 2000 16:20GMT | Last Updated: September 29 2000 17:43GMT
Intel, the world's largest chipmaker, on Friday said it had cancelled the planned production of a low-end microprocessor that had already been delayed by six months because of bugs in a companion chip.
The cancellation of a major chip product is rare at Intel but it should free up production capacity for other microprocessors, many of which have been in short supply for much of the year.
The chip, known by its code name Timna, combined a microprocessor with graphics and memory controller functions. The goal was to replace the need for several other chips and reduce manufacturing costs for low-priced PCs.
But Timna relied on a companion chip, known as a memory controller hub, that would have allowed PC makers to use cheaper types of memory. Bugs in the first version of the memory controller hub chip forced Intel to rework the design leading to a six month delay.
"We talked with our customers and they decided that by the time Timna would be ready in the first quarter of next year, the cost advantage compared with using separate chips would be minor," Intel said.
Linley Gwennap, principal analyst with The Linley Group, a US microprocessor market research company, said that Timna would have flopped if Intel had gone ahead with production.
"Intel has essentially acknowledged that the demand for the chip was close to zero," he said.
Mr Gwennap added that when Intel began work on Timna two years ago, the trend in PC markets was toward sharply lower prices and it seemed that $400 PCs would be selling in large volumes by 2000.
At such low price points, an integrated chip such as Timna would have saved PC makers a significant amount in manufacturing costs.
But the sub-$500 PC market failed to become a large segment of the overall PC market.
Intel's current focus is on its Pentium 4 microprocessor, which will become its mainstream desktop PC product. The company denied reports that chip had been delayed by several weeks. It said the planned fourth quarter introduction was on schedule.
The first Pentium 4 PCs are expected in November, just in time for the busy holiday season.
Although the cancellation of Timna will free up production capacity, it could take a month or more to re-tool the manufacturing lines for other chips.
Shares in Intel fell $2.50, or 5.63 per cent, to $41.94 in early afternoon trading in New York on Friday.
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