ebnews.com _______________
Rough road ahead for low-end PC processor makers
By Mark Hachman, Electronic Buyers' News, (10/08/99, 06:52:11 PM EDT)
Market pressures are slowly tightening around the
throats of low-end PC microprocessor vendors, trapping
Rise Technology Co. and threatening the future of Via
Technologies Inc.'s two design teams.
One of the two paths to escape extinction, executives
say, is to adopt the cynical but realistic viewpoint that
customers want high clock speeds at rock-bottom
prices. "Megahertz matters," said analyst Keith
Diefendorff of MicroDesign Resources Inc., Sunnyvale,
Calif. The only other alternative to dropping prices
directly is to craft less expensive integrated
system-on-a-chip (SOC) devices, according to
observers.
While options seem limited, right now neither alternative
seems appropriate for Rise Technology, which is caught
in a paroxysm of self-doubt. Company executives have
acknowledged that the entire future of the company is
uncertain, including its strategic direction and the status
of new products.
Joe Salvador, senior marketing manager at Rise, Santa
Clara, Calif., said that means reassessing whether
products such as the mP6-II and Tiger will ever ship. So
unsettled is the future of these devices that the company
canceled a technical briefing scheduled for last week's
Microprocessor Forum.
"As far as the mP6-II and Tiger [are] concerned, the
question is, does it make sense to bring these products
to market?" Salvador said.
Instead, an SOC strategy may be in the cards. But
Salvador acknowledged that the company lacks critical
intellectual property to surround its mP6 cores. Salvador
and industry sources alike reported that no final decision
has been reached. "It's all very unclear," one analyst
said.
Centaur Technology and Cyrix Corp., both now owned
by Via, have previously faced the hard realities of
declining average selling prices (ASPs)¥and each has
suffered. Both were sold because the losses they
incurred were unbearable to their parent companies.
Now, however, executives at Via say they're prepared to
limbo under the ASP bar with ultra-low-cost designs.
"Our microprocessor strategy is pretty simple," said Via
chairman and chief executive Wen-Chi Chen. "In
general, we will develop entry-level CPUs. Our strategy
is to complement Intel and AMD. We're going after the
value-added market, but I don't expect Intel to give away
that value-added business to us."
What that will mean, according to Centaur's president,
Glenn Henry, is extremely low-cost designs. "The first
element of our strategy is that we're going to stay at the
low end," Henry said during a panel discussion here at
the MPU Forum last week. "And when I say low end, I
mean substantially low end: under $50."
The other pieces of Centaur's approach involve
integrating the microprocessor with the chipset's north
bridge, while using Cyrix and Centaur to design future
stand-alone products.
According to Chen, the company will initially leverage its
Cyrix organization. Via's first product, which originally
was Cyrix's Gobi chip, is the equivalent of a 400- to
500-MHz processor with a 133-MHz frontside bus. The
Gobi, which has been renamed Joshua, will be unveiled
at Comdex, Chen said. The status of its successor,
Mojave, remains uncertain. In the interim, Via continues
to sell the Cyrix microprocessor line.
Rise and Centaur have always tried to slide under Intel in
terms of die size and power consumption for a lower
overall cost, noted Dean McCarron, an analyst at
Mercury Research Inc., Scottsdale, Ariz. But their ASPs
have been driven by external factors such as difficulties
in manufacturing the chip at sufficient clock speeds and
catastrophic price competition in the low-end category.
One industry watcher was even uncertain that, given a
perfect world, Rise has the recipe for success. "I've
never believed Rise had a viable market," said Kevin
Krewell, an analyst with MicroDesign Resources. "Their
die was always too big and too expensive."
Another predicted that cost overhead will challenge Via
as well. Following its chipset strategy, Via is expected
to "distribute" its own microprocessor designs using
National Semiconductor Corp. as a foundry. According
to Bert McComas, analyst at InQuest Inc., Gilbert, Ariz.,
National and Intel Corp. renegotiated a patent
cross-license agreement in the mid-1990s. While
National's legal ability to manufacture Intel-compatible
chips like Via's seems ensured, McComas said
royalties account for a substantial percentage of the final
cost, possibly as much as 15%.
The one hope for companies such as Via and Rise is to
exploit Intel's bottom line, according to observers.
Because of the R&D costs needed to finance future
microprocessor development, Intel has so far refused to
push below a $50 ASP, McCarron said. On the other
hand, Intel has shown little fear in cracking the $100
barrier, severely wounding chip makers that bet
otherwise.
"Historically, Intel has continually expanded into different
market segments," said a spokesman for Intel, Santa
Clara, Calif. "I seem to recall Mr. Halla at National
commenting that Intel would not play in the sub-$1,000
space. Perhaps you should look into these statements."
In the short term, last month's earthquake in Taiwan
may have given chip vendors something of a reprieve.
The tight supply of components should raise prices
across the board, relieving some of the pressure that
was focused on the microprocessor segment. "If I [as a
PC OEM] am going to be pushed from $400 to $600,
maybe I need to switch the processor, too," McCarron
said.
ebnews.com _______________
Goutama |
