MB -
From tomorrow's IBD, although probably old news -
Intel Corp., one of tech's best companies at meeting deadlines, says it will be late with three new chip products.
The latest delay is with Coppermine, a new version of Intel's best-selling Pentium III chip. It's aimed at the high-end PC market, the same area archrival Advanced Micro Devices Inc. is about to start attacking with gusto.
Intel says Coppermine shipments will be delayed two months, to November, because of design problems. AMD's Coppermine rival, the Athlon, is slated to start shipping next month.
But Coppermine is just the latest problem for Intel. The company in February said it will be late with a new chipset known as Camino, designed to work with Intel's Pentium III chips. Instead of June, as planned, Intel says Camino will come out in September.
And Intel is late with guidelines for a new type of memory. Called Rambus dynamic random access memory, it aims to be several times faster than today's memory chips. Intel plans to use RDRAM with its future processors, but it can't move ahead before the guidelines are completed.
The missteps have caught the eye of some analysts.
''Intel's previously unassailable process technology is now open to fault-finding,'' said Salomon Smith Barney analyst Jonathan Joseph.
Delays are routine in the chip industry, but not for Intel. And AMD is positioned to perhaps benefit, analysts say.
The Coppermine delay stems from a move to a new generation of chips. The etching - metal circuitry - on Coppermine will be 0.18-micron wide. That's less than 1/500 the width of a human hair, and it's smaller than the current state of the art, which is 0.25 micron.
Intel spokesman Tom Waldrop confirmed the Coppermine setback. The chip was set to come out in September, Waldrop says, but it's been delayed two months while Intel fixes the design problem.
''We're simply not able to reach the aggressive target we set for ourselves,'' he said. ''Every product gets faster, and we set more aggressive targets each time.''
Intel officials say they've been working on the problem since April and know what must be done to keep the delay to only two months.
The situation has attracted scant attention from the market, largely because analysts say the delays likely won't affect Intel's profit. The Santa Clara, Calif.-based company, with annual sales of some $30 billion, has one of the broadest product lines of any chipmaker.
Intel is in the process of reorganizing to better sell chips aimed at markets ranging from the cheapest PCs to powerful workstations and servers. Waldrop says it's like trying to keep a half- dozen plates spinning on sticks at the same time. ''It's a complex task,'' he said.
AMD, meanwhile, is about to begin shipping its Athlon microprocessor, formerly known as the K7. At 600 megahertz, it's faster than Intel's fastest processor. Analysts say it's the best shot AMD has had in many years at competing with Intel in the market for the main chips that power high-end PCs.
In the last 18 months, AMD has gained market share in the low-end PC market with its K6 chips, but profits there are thin.
Athlon, like Coppermine, is designed to go into PCs and workstations priced at $1,500 and above. AMD Chairman W.J. (Jerry) Sanders III says Athlon is a ''watershed'' product for AMD. The Sunnyvale, Calif.-based company is, like Intel, trying to offer a range of chips, from entry level to high end.
In the never-ending chip horse race, Coppermine is Intel's answer to AMD's 600-MHz chip.
So even a two-month delay is forcing Intel to act fast. It's decided to offer a chip to fill the gap until Coppermine is ready. Waldrop says Intel this summer will come out with a 600-MHz Pentium III chip.
But there's a key difference between the ''fill-the-gap'' chip and Coppermine. The gap chip uses the 0.25-micron process. The chips will be just as fast as the 0.18-micron Coppermine chips, but they'll cost more for Intel to make.
As chipmakers shrink the size of chips with thinner and thinner etchings, they're able to get more of them onto a wafer - the platters from which chips are cut. More chips per platter lower costs for chipmakers.
Still, assuming Coppermine is released in November, Intel will retain an edge. AMD doesn't expect to come out with any 0.18-micron chips until next year.
So, when all the factors are considered, most analysts don't see the delays as a big threat to Intel's dominance. According to researcher PC Data Inc., Intel has more than 80% of the worldwide market for PC chips.
The Coppermine delay ''probably isn't a major long-term problem,'' Salomon Smith Barney's Joseph said in a report released last week.
Several analysts have told investors to be cautious about buying Intel stock because of the products delays, says Ashok Kumar, chip analyst for US Bancorp Piper Jaffray. But Kumar says he isn't one of them. He says the Coppermine delay might result in a loss of $100 million in sales, minor for a company Intel's size.
In the meantime, Intel is working on a chip that will surpass 600 MHz so the company can leapfrog AMD to regain the title of maker of the world's fastest PC processor.
Regards, Don
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