From IBD : At the end of '98, 0.35 micron will be old
Intel Pushes The Envelope
With A 3-D Graphics Chip
Date: 1/26/98
Author: Reinhardt Krause
When Intel Corp. rolls out its high-end graphics
chip, its manufacturing strategy will take a new
twist.
Santa Clara, Calif.-based Intel plans to make the
chip in the advanced factories usually reserved
for its bread- and-butter products
-microprocessors.
Intel will maintain plenty of room for its
high-profit-margin microprocessors -the brains
of a computer. But it's also making room for the
new line, even though graphics chips -which
create dazzling computer effects - have much
lower profit margins.
To better compete on performance and price in
this new market, Intel must ante up its best
manufacturing lines, says Jon Peddie, president
of Jon Peddie Associates Inc. in Tiburon, Calif.
''They have no choice,'' Peddie said.
Intel expects to unveil the graphics chip in
February, after a several-month delay.
The product will face rivals that also have access
to leading-edge factories that can produce high
quality at lower costs, analysts say.
That's one reason those in the industry have
speculated on Intel's manufacturing plans. Intel
developed the new chip with Real 3D Inc., spun
off as an independent company in January by
Bethesda, Md.-based Lockheed Martin Corp.
Intel will make the 3-D graphics chip using
''0.35-micron process technology and below,''
said Gerald Stanley, Real 3D's president. The
industry's cutting edge today is 0.35 and 0.25
micron. Intel declined comment.
At the heart of chip manufacturing is process
technology. This determines the thickness of
electrical pathways in chips. The pathways are
measured in microns. One micron is 1/100 the
width of a human hair.
Squeezing electronic circuitry boosts the speed
of chips and reduces their size. It also yields
more chips per wafer. Thin silicon wafers are
sliced into hundreds of thumbnail-sized chips.
Intel's most advanced factories are churning out
processors on 0.25-micron manufacturing lines.
Analysts expect that process technology to be
allotted soon for the new graphics chip.
''I expect them to push to 0.25 micron as soon
as they can afford to,'' said Peter Glaskowsky,
an analyst at Micro Design Resources Inc. in
Sunnyvale, Calif.
Seldom if ever has Intel used its top
manufacturing for nonprocessors. In other
markets, Intel has used older factories. Two
examples are logic chipsets and flash memory,
analysts say. Flash memory chips retain data
even when power is cut off. Logic chipsets
provide electrical signals between
microprocessors and computer peripherals such
as hard-disk drives.
The older factories didn't slow Intel in either
logic chipsets or flash memory. It's now the top
supplier of chips in both markets, says market
researcher Dataquest Inc. of San Jose, Calif.
The graphics competition looks tougher, though.
Intel will need more than older manufacturing
lines, analysts say.
''That model doesn't work anymore for graphics
chips,'' said Glaskowsky.
In this market, Intel will take on S3 Inc., ATI
Technologies Inc., Nvidia Corp. , Rendition Inc.
, 3Dlabs Inc. and others.
Intel's graphics rivals design and market chips.
But most don't own manufacturing plants, called
fabs. They contract out production to outside
firms, mostly in Asia.
Most fabless chip firms, however, have access
to more advanced manufacturing lines than they
did a few years ago. Overcapacity in the chip
industry has opened the door, analysts say.
So, many graphics chip suppliers already are
selling devices produced at 0.35-micron
factories. This year, most will move to
0.25-micron production.
At first, Intel might lag some rivals in process
technology for graphics chips, says Dean
McCarron, industry analyst at Mercury
Research Inc. in Scottsdale, Ariz. ''At the end of
'98, 0.35 micron will be old,'' he said.
Intel's rivals say they'll compete by quickly
designing new products. Santa Clara, Calif.-
based S3 expects to roll out two new high-end
graphics chips in '98.
''We don't believe the advantage is with
(manufacturing) size and scale,'' said Ron Yara,
S3's senior vice president of strategic marketing.
''Not in this market, where product life cycles
are nine months.''
Even before Intel's entry, S3 is struggling. The
company this month says it will cut its work
force by 15%, about 100 employees.
Other graphics chipmakers also are coping with
lower profit margins because of oversupply.
How much market share Intel will grab remains
to be seen.
''In the market it fits into - the desktop space of
$1,500 to $3,000 personal computers -(the
graphics chip) will have superior performance at
a very competitive price,'' said Real 3D's
Stanley.
Intel bought a 20% stake in Real 3D this month.
Terms weren't disclosed. The 180-employee
company is valued at about $200 million, Real
3D says.
Intel also is buying Chips and Technologies Inc.
for $420 million. The San Jose- based firm
makes graphics chips for notebook computers.
The Federal Trade Commission recently OK'd
the acquisition. Intel also owns a small stake in
3Dlabs.
More powerful graphics chips are expected to
boost demand for personal computers. The
chips let PCs mimic the fast-paced graphics and
visual effects found in arcade games.
But 3-D chips are underutilized because most
PC software depicts scenery in two dimensions,
says Peddie.
''Of 40 million graphics chips sold in '97, only 3
million to 5 million were seriously used for 3-D
applications,'' Peddie said. ''The rest were doing
2-D work. But that will change at the end of
'98.''
Better PC graphics also will boost electronic
commerce on the Internet, says Ron Smith,
general manager of Intel's computing
enhancement group.
''The visual computing experience is a key part
of the PC platform going forward,'' he said. ''We
want to make sure it moves along fast enough.''
(C) Copyright 1998 Investors Business Daily,
Inc.
Good Luck To Each And All
Curly
~~~~~~~~~^^
[6.6]
.....>
[_] |
