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Technology Stocks : C-Cube
CUBE 37.00-0.2%3:59 PM EST

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To: DiViT who wrote (35873)9/14/1998 11:13:00 AM
From: BillyG  Read Replies (4) of 50808
 
Excellent article on the video-CD battle in China. The efforts of Zoran, LuxSonor and ESST to "contain CUBE," which is the dominant VCD player in China. Click on the link for some nifty comparison tables and diagrams.
eet.com

Chip makers rush to meet China's homegrown video-CD spec

By Junko Yoshida
with additional reporting by Sunray Liu

BEIJING - In a move that could mark its technology independence, China
is poised to release a homegrown specification for next-generation
video-CD players, dubbed Super VCD, that could serve a market of as
many as 15 million users by 2000. Among the host of semiconductor and
systems companies racing to meet the spec upon its market arrival is Zoran
Corp., which is expected to announce a single-chip SVCD implementation
within a week.

Today's Chinese market is by far the world's largest consumer of video
players that conform to the Video CD format. SVCD will offer higher
quality than VCD but at lower costs than a full-blown digital-videodisk
(DVD) player. The SVCD effort is at the vanguard of a broad campaign by
China's authorities to establish home-grown standards for its electronics
markets and producers.

The standard itself has been nearly a year in the making by the China
National Technical Committee of Standards on Recording - comprised of
30 members from the country's manufacturing and research communities -
which voted on the specs in August and forwarded the results to the
Ministry of Information Industry (MII). At press time, that government
agency was expected to release the final, detailed specs within days.

Whatever the release date, the government and domestic industry will likely
consider it China's technological independence day, signaling to the world its
desire to control its own destiny in consumer technology. The country
doesn't intend to shut out foreign suppliers, but those companies had better
be prepared to conform to China's sanctioned view of its home markets.

Jin Zhenglong, deputy secretary general of the China Electronic Audio
Industry Association (Shanghai), was recently quoted by China's Xinhua
news service as saying that "foreign companies should not try to take control
of China's digital-disk industry [or use] their technological and financial
muscle to force Chinese firms to adopt their standards. We like to introduce
advanced foreign technology, but we don't want to attach ourselves to any
foreign company."

handpicking SVCD-system and -component suppliers partly on the basis of
their willingness to comply with its new standard, the Chinese government
hopes to fend off a format battle and early market confusion over the
next-generation video CD standard. At least three incompatible formats
have been duking it out for the title of successor to Video CD: China
VideoCD (CVD), developed by C-Cube Microsystems and its Chinese
OEM partners; the government's own SVCD format; and HQ-VCD,
pitched by the Video CD Consortium. The latter group is comprised of
Matsushita, Philips, Sony and JVC, which originated the Video CD
standard.

U.S. chip vendors and Japanese and European consumer-electronics giants,
ostensibly in the cause of helping China develop its next-generation Video
CD standard, have been competing fiercely here for share of mind. Over the
past year, each has negotiated with the Chinese government and Chinese
OEMs, proposing slightly different, incompatible specifications in a bid for
the inside track to a potentially huge consumer market.

SVCD's pending passage, however, appears to have some of the
competitors in a conciliatory mood. Notably, U.S. chip vendors ESS
Technology (Fremont, Calif.), LuxSonor (Fremont) and Zoran (Santa
Clara, Calif.) have decided to present a united front in working with the
Chinese government and have fallen in behind Beijing in touting "an industry
standard open to everyone."

Some sources said the move could constitute an effort among ESS,
LuxSonor and Zoran to contain C-Cube Microsystems (Milpitas, Calif.).
C-Cube not only dominates the current VCD market in China but has gone
its own way in pursuing a successor spec, launching the proprietary CVD
format in June with its OEM partners. Sources said the CVD camp,
apparently impatient with the sluggish pace of the government's standards
effort, opted to act unilaterally rather than miss what may be only a small
window of opportunity for the new VCD standard before DVD
digital-videodisk players take off here.

Both Chinese government officials and U.S. chip vendors have expressed
concern that C-Cube and its OEMs may be hatching a plot to make SVCD
a subset of CVD. Some U.S. industry sources claimed that CVD disks are
already available that incorporate a C-Cube-developed proprietary
content-scrambling system. The scrambling feature would make it virtually
impossible for SVCD players to unscramble CVD content and play back
CVD disks. Meanwhile, C-Cube has hinted that CVD players will be
adjusted to play back SVCD disks.

Asked whether the Chinese government and some chip vendors are joining
hands expressly to drive CVD out of the market, Harold Liang, chief
executive of LuxSonor, said, "We are not containing C-Cube. But we want
to make sure that C-Cube doesn't contain us."


Nonetheless, a C-Cube spokeswoman said that her company is working
with the Chinese government and OEMs to ensure a single, compatible
standard. Citing "multiple political issues" on which she failed to elaborate,
she said, "We cannot afford to be controversial over the formats right now.
We need to lay low on our public commentary and speculations."

Despite that comment, the SVCD and CVD camps have been flooding the
prime-time airwaves with advertisements for their competing formats on
China's national CCTV. The ads mask the reality that there are far more
titles available for the existing VCD format than either SVCD or CVD.

Meanwhile, the Chinese government is said to have succeeded in
persuading Video CD Consortium members to drop the name HQ-VCD
while the government works elements of the consortium's format into the
final SVCD standard.

Development work at the silicon level continues apace. Zoran, a newcomer
to China's Video CD market, is expected to announce a single-chip SVCD
here on Sept. 15. Chinese system OEMs, foreign disk-drive manufacturers
and a number of Ministry of Information Industry (MII) officials are
scheduled to share the podium at the Zoran announcement.

LuxSonor, for its part, staged an SVCD seminar recently in Shenzhen. "A
pent-up demand for the new standard drew close to 400 people to our
event, even though we sent out our invitation to only a little over100
people," Liang said. Attendees at last month's event included Chinese
system OEMs, disk manufacturers and title developers, as well as
high-ranking MII officials, Liang said.

ESS Technology will release its own SVCD-compliant solutions within the
next few weeks, promised Fred Chan, chief executive officer.

Responding to a Chinese government demand to prove that SVCD is not a
paper standard but is backed by a real product commitment, a dozen
Chinese consumer-electronics companies held a joint press conference in
Beijing on Sept. 1 to demonstrate SVCD, according to Chan. A similar
press conference was held on Sept. 6 in Shanghai, with several additional
OEMs joining the announcement. That puts the number of manufacturers
that have publicly committed to building SVCD players at 15 or 16.

This past week, Zoran, LuxSonor and ESS all said they had a preliminary
copy of the final SVCD spec in hand. But all said they were still waiting for
the official final version to be released.

The basic components of the SVCD technical spec are support for
MPEG-2 video, 2/3 D1 video resolution (480 x 576), MPEG-1 and
MPEG-2 Audio Layer II, two-channel audio, variable-bit-rate (VBR)
encoding, overlay graphics and text, and a 2X speed CD-ROM drive with
a multiple tray.

The current VCD format, by contrast, provides for resolution of 352 x 288
based on MPEG-1 video.

Under SVCD's overlay-graphics and text technology, text would be
multiplexed with audio and video streams. The intent is to improve the
quality of subtitles and multiple languages displayed on-screen. In the VCD
standard, such subtitles were compressed with video, resulting in a
low-quality text display, according to Shmuel Farkash, vice president of
video products at Zoran.

Notable differences between SVCD and the DVD format, meanwhile,
include the lack of support for Dolby Digital in SVCD, as well as the
Chinese format's use of a CD rather than a DVD drive. After that, the specs
are virtually identical.

DVD's DVD-ROM drive is the single largest contributing factor to its cost
premium over SVCD, which Farkash said "can offer DVD-quality video at
only an incremental price increase over VCD." Zoran estimates the initial
price of an SVCD system at around $175 to $200, compared with VCD's
$150 to $175.

The new SVCD system could displace the Video CD format - which
logged 15 million units here in 1997 alone - in China by 2000, some
sources predict. At the same time, despite its higher price tag, DVD is
expected to post steady gains here. Some believe DVD may be the
dominant digital-videodisk format in China by 2001.

Zoran's Farkash is among those who believe the transition to SVCD will
happen quickly. "We are hearing that some VCD manufacturers have
already stopped manufacturing VCD in preparation for SVCD," Farkash
said.

Zoran has not participated in China's VCD market until now and thus must
be aggressive in promoting its SVCD solution. The chip integrates a
proprietary digital signal processor that Zoran specifically designed for
audio, an on-screen-display processor, an overlay-graphics and text
processor, MPEG demux, MPEG-2 video decoding, a host interface, a
phased-lock loop and a memory interface.

The proprietary audio DSP,
designed to handle not only
MPEG audio decode but also
karaoke processing functions,
will play a pivotal role in the
chip's ability to compete against
other companies' chip sets,
Farkash said. Zoran's solution
won't require a separate
audio-processing chip for such
karaoke functions as
voice-cancel, echo and key
control. C-Cube's CVD solution, by contrast, uses a Yamaha karaoke
processor.

Zoran's 40-Mips embedded DSP also accommodates Dolby ProLogic,
3-D virtual sound and music modes. Such features may be market
differentiators or market mandates in the future, Farkash said.

Zoran's chip, designated the ZR36205, also needs less memory for
decoding MPEG-2 video than competing solutions do, according to
Farkash. Zoran last year patented a method for using only one 16-Mbit
DRAM for MPEG-2 video PAL (phase-alternation line) decoding.

Taiwan Semiconductor Manufacturing Co. is producing the chip in volume
for Zoran on a 0.35-micron process.
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