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To: leigh aulper who wrote (441)	10/17/1999 11:22:00 AM
From: AJ Berger	Respond to of 482

TI exits competitive DVD chip market to focus on disk drives By Stephan Ohr EE Times (10/15/99, 11:07:03 AM EDT) TUSTIN, Calif. ( ChipWire) -- Texas Instruments Inc. has quietly decided to fold its current efforts in digital video disk (DVD) components and turn its full attention to chips powering hard-disk drives. The move, which involved the layoff of 189 people from TI's Storage Products Division here, is the latest sign of ongoing struggles in the market for interface components for DVD-ROM drives. Suppliers are finding this market a tough nut to crack. While Cirrus Logic Inc., of Fremont, Calif., is claiming success with highly integrated read-channel and controller chips, other manufacturers are pointing to slower-than-expected ramp rates and intense competition. And even Cirrus acknowledges that the sale of computer-based DVD products has been stunted by the large cost delta between DVD-ROM and CD-ROM drives, and a lack of compelling DVD applications. Early forecasts suggested such drives would totally displace CD-ROM drives in desktop computers -- to the tune of 100 million units per year -- by 2002, said John Lee, vice president of marketing for Cirrus' Optical Storage Division. But demand has been stifled by a lack of software in the DVD-ROM format, he said. Moreover, users are only willing to pay a few dollars more for DVD-ROM over CD-ROM, not the $40 cost differential that now characterizes the market. TI's storage group was developing ICs for what it called "comby drives": computer-based optical-disk drives that could read DVD-ROMs and read/write CD-ROMs as well. Market figures for these drives were overly optimistic and the competition was severe, a TI spokesman said. Besides Cirrus, other chip makers building DVD-ROM controllers include LSI Logic, Philips Semiconductors, and Media Tech in Taiwan. Analyst Will Strauss, who tracks the storage IC market for Forward Concepts in Tempe, Ariz., confirmed TI's need to devote resources to ICs for hard-disk drives. Formerly No. 1 in read-channel ICs, TI has slipped to third place behind Lucent Technologies Inc. and Cirrus, he said. This market is increasingly dominated by "superchips" that integrate both read channels and disk controllers, an arena in which TI was playing catch-up to Cirrus Logic, said Strauss. With design wins at Sony Corp., Cirrus similarly appears to lead in ICs for DVDs, Strauss said. But casualties among the contending IC suppliers are not suprising. "The early forecasts were a lot rosier than they are now," Strauss said. Only 12.4 million DVD drives will ship in 1999, most of them -- some 8 million -- DVD-ROM drives for computers. And many makers of consumer DVD players -- including Toshiba and Matsushita -- are vertically integrated and thus build the key components of those drives in-house.