Via readies second volley in CPU battle
By Mike Clendenin, EE Times
Mar 21, 2001 (11:20 AM)
URL: siliconstrategies.com
TAIPEI, Taiwan — Hoping to strike deeper into the CPU market, Via Technologies will officially unveil its second generation microprocessor at two upcoming conferences later this month, including CeBit in Hannover, Germany and WinHEC in Anaheim, Calif. And based on tests claiming that it performs equitably against Intel's Celeron on commonly used 2D applications, the company believes it can win 5-to-7% market share this year.
To reach such an ambitious goal, Via is sinking deeper roots into emerging markets like China and India, where it hopes to exploit cracks in the global strategies of Intel and Advanced Micro Devices. Key to its plans will be pushing Information PC designs that bundle the Via Cyrix III, based on the new Samuel 2 core, with the Via Apollo PLE133 chip set and its integrated AGP 3D/2D graphics core.
The new Samuel 2 core is the scrappy Taiwanese company's effort to arm itself anew to do battle for the low end of the PC market with Intel and AMD. The 1.5-volt, 750-MHz chip will be quickly followed by an 850-MHz version. Both will be made with a 0.15-micron process, use a 133-MHz front-side bus and feature 64 kbytes of L2 cache, which the company says will boost performance by 10 to 30 percent over its predecessor. The Samuel 2 is expected to ship in volume this summer and to have a footprint of 52 mm2. Around the same time, Via predicts it will have a 1-GHz version ready for sampling, which will be made with a 0.13-micron process.
The company will be making a hard push for its CPU at CeBit and WinHEC, offering Information PC, set-top box and motherboard design references, in an attempt to persuade systems vendors that their CPU can hit value-PC and Information PC price points between $200 and $500, an attractive match for emerging markets. "They are banking on China, southern and Southeast Asia for success with Cyrix," said Ben Lee, a semiconductor analyst with Gartner Group. "Via is very ambitious, and the competition from it is getting stronger and stronger. This is not the same Via that Intel met a few years earlier."
Anyone who has watched Via over the years knows that it has done the improbable before. Shortly after taking his company public in 1999, chief executive Chen Wen-chi firmly established a $1 billion-a year-company on the back of PC133 chip sets — exploiting a different crack in Intel's global strategy.
Now, after a few missteps and some disappointment with the Joshua and Samuel 1 cores, the CPU flyweight is steeling itself for the long-haul toil of slugging it out with the industry's top two heavyweights.
"Of all the (vendors) Via thinks it can win over, Intel's going to come in and take back at least a third of them and maybe half," said Bert McComas, principal analyst at InQuest. "Via is going to have to fight through it just like AMD did with the K6, when that company had no credibility."
So far, Via has been guarded about its sales results. The company says sales in India are strong and its lead marketing agent, Richard Brown, has made that country his personal bailiwick. CPU orders are also trickling in from two major Chinese PC makers, Legend and Founder. In February, Via was expected to start shipping around 30,000 units per month and estimated increased sales in the second quarter.
But sources close to the company say that Intel, as expected, is exerting pressure on the systems makers, who, in turn, are using Via as leverage for cheaper pricing.
When news of the CPU orders from China leaked to the Taiwanese press, Via initially declined to confirm the sale and executives at Via were angry that the news had been made public. Perhaps with good reason. Just weeks after the reported sale, rumors circulated here that Legend and Founder were rethinking their decision to go with Via. And, according to Primasia Securities, a portion of the CPU orders has been delayed.
"It's inevitable that Intel will exert pressure," said Paul Meyer, an analyst at Credit Lyonnais. "But I don't know if it will cause order switching, because Intel can't come down to the price that Via's offering."
Nevertheless, the company's marketing reps have been executing an industry offensive against its CPU competitors, jumping on every opportunity to thump the viability of the Celeron, and to a lesser extent, the Duron, to satisfy the low-cost needs of the low-end PC market.
Attend a speech by Brown and one gets the feeling that Intel is focused only on tech junkies and gamers, who need lots of power, speed and graphics support. Via, on the other hand, is pitched as the common man's CPU — the world's best hope to see a PC in every home.
And the engineering team is close behind with a dose of technical evangelism. "As we go into higher and higher speed grades, we continue to deliver decent performance upgrades," said C.J. Holthaus, one of the lead CPU engineers at Centaur Technology, the Via subsidiary that designs CPUs. "One of our design goals was to optimize for cache misses. If you have to go out to the memory bus and fetch memory, that's a huge penalty, especially when you're running on a 9:1 ratio between what the internal CPU core is and what the front-side bus is. So we made a lot of optimizations that really make a difference when you go to higher and higher megahertz.
"If you look at Intel's performance," he said, "as it goes from 700 to 733 to 766, that 66-MHz front-side bus is running out of gas."
But Via knows that price and performance might not be enough to pry market share from Intel, whose Hong Kong offices did not respond to interview requests regarding the company's Asia strategy.
McComas points out that Intel will continue its attempts to quash any deals it catches wind of in Asia. "These things can slip through the cracks. But if it hits the headlines, then it's a corporate embarrassment. Intel will call out the big guns and all of the sudden the road to Beijing is paved with gold. There are only a few companies that have the fortitude to not accept some of the insane offers that would be thrown at them. This is what Via is up against," he said.
Recently, analysts have speculated that Via has scored design wins with IBM, Compaq and Hewlett-Packard, but these have not yet turned into orders. Yet analysts remain positive about Via's prospects for pushing CPUs this year. China's ongoing computerization in commercial and governmental organizations is expected to spur PC demand there, bucking the global slowdown. And Via's cost advantage gives it staying power against even a determined Intel or AMD.
"At the end of the day, the Cyrix III is cheaper than any other CPU on the market," said Shane Dennison, assistant marketing manager at Via. "There has been cost analysis done between what Via can make a product for and what Intel can make a corresponding product for in the States. The difference in manufacturing cost is around 30 percent. Our business structure is just a lot leaner and meaner and smaller."
Last year, the Microprocessor Design Report estimated that Via's manufacturing cost for the 667-MHz version of Cyrix stood at below $35. The processor sold for $160 in quantities of 1,000. "Even if discounted heavily . . . the new version of the Cyrix III should yield a comfortable profit for Via," the report said. And this was when foundry capacity was at a premium.
With Via's main foundry partner, Taiwan Semiconductor Manufacturing Co., running at far below capacity, Via should be able to haggle even lower manufacturing costs on leading-edge processes. Intel, however, is expected to reserve most of its advanced processes for the Pentium 4 and likely leave the Celeron at 0.18 micron. "Intel can slash the price and sacrifice their margin," said one analyst at Salomon Smith Barney, "but in the end that won't be the long-term solution."
Not so long ago, during the days of Via's Joshua core, the prospect of a credible challenge to Intel seemed laughable. Even today, the match-up is somewhat comical. Intel has the resources to spend $300 million — one third of Via's 2000 revenues — for a few months of Blue Man Group promotion on the Pentium 4. Via sponsors rock bands on college campuses in Beijing.
But that doesn't matter so much to Holthaus, who has been going up against Intel since Centaur was owned by IDT. He is convinced that there is room to maneuver in Asia. A few dark corners or stones unturned by Intel and AMD is all he's looking for. "We're not afraid to be the bottom-feeders of Asia," he said. "We'll go anywhere that the others aren't. Anywhere." |
