Via challenges Intel in high-stakes gamble
By Faith Hung, EBN
Oct 19, 2001 (11:33 AM)
URL: ebnews.com
TAIPEI -- Via Technologies Inc. is looking for new pastures even as Intel Corp. tries to raise a fence around the company's Pentium 4 chipset business.
In a bold move, Via said it will enter the motherboard market to stimulate business for its controversial -- and unlicensed --double-data-rate SDRAM-enabled Pentium 4 chipset. If that wasn't enough to raise Intel's blood pressure, the Taipei-based chipmaker said the same day that it will field a 2GHz P4 clone based on Intel technology-again, without a patent license.
While some applauded Via's bravado, others said the measures in part are a sign of how anxious Via is to find a market for its P4x266 chipset.
“Via taking this approach to help promote its chipsets suggests that it's getting somewhat desperate under pressure from Intel,” said Steven Liao, an analyst at HSBC Securities Asia Ltd. in Taipei.
To date, Via has sold only about a million of the devices, almost exclusively to second-tier board makers. Most of the top-tier suppliers interviewed by EBN this week said they won't risk Intel's wrath by supporting the contested chipset.
“We won't make P4 motherboards for Via simply because we don't want to make Intel unhappy,” said Roger Ho, a marketing and sales assistant vice president at Biostar Microtech International Corp., Taipei. “About 80% of the industry's standards are set by Intel. If they're upset with you, you won't get the latest roadmaps and information.”
Upset, indeed. Via's allegedly illegal use of Intel's technology in its P4x266 chipset and C3 microprocessor has triggered lawsuits in Germany, Taiwan, the United Kingdom, and the United States and alienated potential customers.
The pall cast by Intel's legal assault contributed to Via's recent decision to cut its full-year pretax profit target by 37.8%, to $152.4 million, and its sales forecast by 24.4%, to $985.5 million.
By contrast, rivals such as Silicon Integrated Systems Inc. have fared better by adhering to Intel's market strategy, which prohibits companies from rolling out DDR-enabled P4 chipsets until after Intel unveils its own device next year.
Going it alone
That reality prompted Via this week to create a motherboard business unit -- Via Platform Solutions Division (VPSD) -- to address the PC, workstation, and server markets.
VPSD will sell and market to OEMs, system integrators, and distributors and provide logistics and technical support through Via's global network in China, Germany, Hong Kong, Taiwan, the United Kingdom, and the United States.
The boards will be manufactured by small companies in China and Taiwan, which Via declined to name.
“We won't make motherboards for Via due to the pressure from Intel,” said an executive at Microstar International Corp., who asked not to be named. “Still, that's not to say smaller companies won't do it. Via is giving them a chance to make money.”
Via said a small quantity of its motherboards have already begun shipping, but would not reveal customers or discuss potential legal entanglements.
“Intel's strategy is to delay Via's shipment as much as possible until Intel's own DDR chipset is available,” said Tony Tseng, an analyst at Merrill Lynch & Co. Inc. in Taipei.
Intel representatives in Taipei declined to comment.
Pressure from Intel isn't the only reason Via may get the cold shoulder from motherboard makers. The company's decision to design its own boards is likely to cause friction with companies like Asustek Computer, Gigabyte Technologies, and Microstar, which carry Via's chipsets in motherboards designed for Advanced Micro Device Inc.'s K7 processor series.
“The motherboard players won't want to see their share being taken away by Via,” HSBC's Liao said.
That sentiment was echoed by Peter Chang, a product manager at Taipei-based Asustek, Intel's biggest in-house motherboard supplier. “What Via is doing is a conflict of interest,” Chang said.
Even if Via overcomes resistance from motherboard manufacturers, the pros-pect looms that Intel might use similar tactics to dissuade PC makers from using the contested motherboards. The company declined to discuss its sales plans.
Entering the clone zone
In a related move, Via's reputation as a maverick gained new status last week when the company said it will launch a clone of Intel's P4 processor. Though still in the planning phase, the company said the 2GHz chip is slated for introduction in 2003 at the earliest, at which point the clock speed will have been relegated to economy-class PCs.
According to a Via spokesman, the 2GHz clone, code-named CZA, will be made on a 0.10-micron manufacturing process under development by Taiwan Semiconductor Manufacturing Co. Ltd., which has said the technology would be available next year. |
