Intel's Merced chip design completed
By Stephen Shankland and Michael Kanellos
Staff Writers, CNET NEWS.COM
July 13, 1999, 4:45 p.m. PT
The Merced chip design has been completed, Intel said today, and the company will
produce samples of the new 64-bit processor this quarter.
The chip design announcement is a milepost in the Merced schedule, which has been hampered by delays. Intel
has said that it expects to begin manufacturing Merced chips in high volumes by mid-2000.
Merced is the first in a new line of high-performance microprocessors that Intel hopes
will carry it from making chips for mainstream PCs and servers to the lucrative world
of providing silicon to manufacturers of huge, heavy-duty servers and minicomputers.
Merced and its successors will compete more directly with chips such as the
UltraSparc from Sun Microsystems and the Alpha from Compaq Computer.
The crucial design development that Intel announced today is known in the industry as
a "tape-out," meaning that a chip's design has been completed and sent to the factory.
Next in the development stage is "first silicon," also known as first prototypes.
Samples are then sent to customers so they can begin developing products around the
new chips.
"It [Merced] has taped out and remains on schedule to sample later this quarter," said
Paul Otellini, general manager of Intel architecture business group, in a conference call
today. Computer manufacturers will get samples this quarter, he said.
So far Merced has won the support of the biggest computer manufacturers. However, it suffered a six-month
delay last year, and analysts have said the chip has again recently slipped past internal Intel schedules.
Last week, Linley Gwennap of Microdesign Resources had said first silicon of the Merced chip was scheduled for
early June but now is expected in August. There typically is a one- to two-month gap between tape-out and first
silicon.
Gwennap has said that because Merced is such a new architecture, a one-year delay between first silicon and first
systems is optimistic. With that assessment, the first computer systems likely would arrive in the last three months
of 2000.
Although major computer manufacturers have folded Merced into their product lines, financial and technology
analysts have said Merced systems will largely be used to test out the new architecture.
Many expect Intel's 64-bit chips to take off not with Merced, but with McKinley, its successor due in late 2000.
Merced will likely come out at 800 MHz, sources have said. McKinley, however, will start at 1GHz (1,000
MHz) and offer twice the overall performance, Intel executives have said.
The IA-64 architecture came from a joint development effort between Intel and Hewlett-Packard. The name
refers to the fact that 64-bits of data can be processed during one clock speed. Current Intel chips are based
around a 32-bit architecture. UltraSparc and Alpha utilize a 64-bit architecture.
The software picture also seems to favor McKinley over Merced. The chip is aimed at customers buying
high-powered servers, which happen to be the most conservative customers around. Although software written
for current Intel chips will run on Merced, it won't fulfill the chip's potential for speed unless it's revamped, and
that takes time.
Sun a step ahead
One competitor to Merced is UltraSparc III, code-named Cheetah, from Sun, though Sun will continue to sell
software for Intel-based servers as well.
Sun chief executive Scott McNealy said in April that Cheetah had taped out, and that samples were due in the
same month. UltraSparc III-based computers are expected in the first half of 2000.
UltraSparc III will debut at a clock speed of 600 MHz and a feature size of 0.18 microns, Sun has said. It has 25
million transistors and is designed to work by itself or teamed with hundreds of brethren.
Intel Gains After Hours as Wall Street
Applauds Outlook
By Heather Moore
Staff Reporter
7/13/99 7:45 PM ET
Intel (INTC:Nasdaq) shares tumbled as low as 63 1/8 in heavy
after-hours trading but then rebounded to 66 1/2 following the
chipmaker's second-quarter earnings report. The stock closed
the regular session at 65 3/8. Citing lower shipments in its
motherboard and microprocessor units, Intel said it earned 51
cents a share. That's 2 cents below the 31-analyst First Call
estimate but ahead of the year-ago 33 cents. After-hours traders
seemed to find hope in Intel's claim that stronger results will
come in the second-half.
Net income totaled $1.7 billion for the quarter, up 49% over the
$1.2 billion the company reported a year ago but down 13%
from the $2 billion it reported in the first quarter of this year.
Second-quarter revenue came in at $6.7 billion, a 14% increase
over the $5.9 billion last year but a 5% decline from the $7.1
billion the company reported in the first quarter of this year.
But how strong is strong? That's what analysts wanted to know
on today's conference call with company executives.
CFO Andy Bryant said sales in the second half of the year
would be "strong." But there's a big difference, some analysts
pointed out, between a strong half in relation to last year's
extremely strong second half and one that is strong only in
relation to last half's more tepid results.
Bryant's answer was less than satisfying. "I don't want to get
into finer detail about what a strong second half is," he said.
"We really don't see anything dramatically different in the
second half than what you would expect."
He was clearer on the definition of strong demand for the
company's top-line products. Unit sales of the Pentium III chip,
which saw disappointing sales in the first quarter, tripled last
quarter and are now expected to make it the top-selling
microprocessor in the world in unit volume this quarter.
Merrill Lynch analyst Joe Osha had predicted Intel would
come in with earnings of 55 cents a share. "It was not the
greatest quarter," he said. Still, he hung up after the call feeling
good about the rest of the year. "The outlook for the back two
quarters looks great."
On the call, Paul Otellini, head of Intel's architecture business
group, said the company has seen increased sales at both the
high and low ends of the chip market. Unit sales rose for its
low-priced Celeron chip but not at the expense of the more
profitable Pentium lines, as has been feared. Instead, Celeron
has been stealing customers away from other companies, he
said, without naming prime rival Advanced Micro Devices
(AMD:NYSE).
Better yet, Otellini said, the company is not gaining back the
share by subsidizing these chips. While Celeron-based "free"
PCs have been showing, Internet service providers and other
"third parties" are eating the cost of the chips. "In general, those
sales are not impacting our balance sheet or profit and loss," he
said. Next quarter, he said, Celeron sales should be strong as
the company continues to pummel its rivals. "Celeron will grow
with the market," he said, "and with our ability to win back
business."
TheStreet.com previewed Intel's report this morning.
-- Marcy Burstiner |
