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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (4532)	9/29/2000 5:17:34 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

Intel cancels Timna chip production By Tom Foremski in San Francisco Published: September 29 2000 16:20GMT \| Last Updated: September 29 2000 17:43GMT Intel, the world's largest chipmaker, on Friday said it had cancelled the planned production of a low-end microprocessor that had already been delayed by six months because of bugs in a companion chip. The cancellation of a major chip product is rare at Intel but it should free up production capacity for other microprocessors, many of which have been in short supply for much of the year. The chip, known by its code name Timna, combined a microprocessor with graphics and memory controller functions. The goal was to replace the need for several other chips and reduce manufacturing costs for low-priced PCs. But Timna relied on a companion chip, known as a memory controller hub, that would have allowed PC makers to use cheaper types of memory. Bugs in the first version of the memory controller hub chip forced Intel to rework the design leading to a six month delay. "We talked with our customers and they decided that by the time Timna would be ready in the first quarter of next year, the cost advantage compared with using separate chips would be minor," Intel said. Linley Gwennap, principal analyst with The Linley Group, a US microprocessor market research company, said that Timna would have flopped if Intel had gone ahead with production. "Intel has essentially acknowledged that the demand for the chip was close to zero," he said. Mr Gwennap added that when Intel began work on Timna two years ago, the trend in PC markets was toward sharply lower prices and it seemed that $400 PCs would be selling in large volumes by 2000. At such low price points, an integrated chip such as Timna would have saved PC makers a significant amount in manufacturing costs. But the sub-$500 PC market failed to become a large segment of the overall PC market. Intel's current focus is on its Pentium 4 microprocessor, which will become its mainstream desktop PC product. The company denied reports that chip had been delayed by several weeks. It said the planned fourth quarter introduction was on schedule. The first Pentium 4 PCs are expected in November, just in time for the busy holiday season. Although the cancellation of Timna will free up production capacity, it could take a month or more to re-tool the manufacturing lines for other chips. Shares in Intel fell $2.50, or 5.63 per cent, to $41.94 in early afternoon trading in New York on Friday. news.ft.com Ö¿Ö

To: Voltaire who wrote (4532)	9/29/2000 5:24:42 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

Intel Cancels Plans to Sell Inexpensive Timna Chip (Update3) 9/29/00 1:20:00 PM Source: Bloomberg News URL: cnetinvestor.com Santa Clara, California, Sept. 29 (Bloomberg) -- Intel Corp. said it canceled plans to sell an inexpensive chip code-named Timna, partly because the No. 1 chipmaker couldn't release the device by the time personal-computer makers wanted it. Timna, designed for PCs that cost less than $600, would have combined processing, memory and graphics functions into one chip. Its release had already been pushed back to first quarter from the second half of this year. Intel had originally designed Timna to use Rambus Inc. memory and changed to a different standard after Rambus proved too costly. The chipmaker would have needed to postpone Timna by another month to fix glitches in part of the new design, and that pushed the introduction too far back for PC makers' schedules, spokesman Mike Sullivan said. The prices on other Intel chips such as Celeron have fallen enough that PC makers don't need Timna anymore, he said. ''It just doesn't make sense to continue,'' Sullivan said. Intel doesn't expect any financial impact from the decision to cancel Timna because PC makers will replace the chip with other Intel gear, he said. Timna was expected to cost $70 each, and low- end desktop Celerons sell for $69. The top Pentium IIIs run $669. The shares of Intel, based in Santa Clara, California, fell 2.88 to 41.56. They've lost 45 percent of their value since hitting a record of 75.81 on Aug. 28. Rambus shares fell 2.81 to 78.94. Better Focus Analysts said Intel could even be helped by the decision. The chipmaker can now shift space and resources to high-end processors being introduced this year and away from Timna. ''Intel took a pretty courageous step by canceling a program that wasn't going anywhere,'' said Nathan Brookwood, an analyst with researcher Insight 64. ''Of all things they're doing, Timna was one of the least important.'' Future sales are going to be driven by the powerful Pentium 4 chip coming in the fourth quarter and the Itanium processor aimed at server computers that run Web sites and corporate networks, he said. Chip designs usually last 18 months before being overhauled, and Timna would have been 9 months old by the time it hit shelves. Waiting for solutions to memory problems just didn't make sense, Brookwood said. ''Pentium 4 is clearly Intel's most important strategic program at this point,'' Brookwood said. ''If (Timna's) resources can be deployed to Pentium 4-type production, in the long run that benefits Intel far more.'' Surprises The glitches with Timna's memory translator hub, or MTH, are the same problems that forced the May recall of about 1 million Pentium III motherboards, the main circuit boards in PCs. The company took a $200 million charge during the second quarter to cover that recall after PCs with the MTH part were shutting down or freezing up. Even if canceling Timna doesn't hurt Intel sales, the move represents that latest in a series of surprises that have raised concern with analysts and investors. Advanced Micro Devices Inc., Intel's biggest rival in the microprocessor market, has picked up sales and topped Intel technically by adding speedier processors first. Advanced Micro released the first 850-megahertz and 1-gigahertz devices. That left Intel racing to keep up. A month after unveiling a 1.13GHz Pentium III to regain the speediest-chip title, the company found a flaw and recalled the devices. Intel stunned investors last week, when it said third-quarter sales won't meet expectations because of weak demand in Europe. The chipmaker also faces new competition from Transmeta Corp. in the market for low-power processors used in laptops. b''Intel is definitely getting competition in segments where it never had it before,'' said Mike Feibus, an analyst at Mercury Research Inc. ''There's more stress than there has been, arguably ever.'' Ö¿Ö