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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Tom Cannon who wrote (5736)	1/15/1998 1:04:00 AM
From: D. Dreon	Read Replies (1) \| Respond to of 11555

From WSJ IDTI now makes the "competitors" list Intel Looks to Control Graphics-Chip Market By DEAN TAKAHASHI and FREDERIC M. BIDDLE Staff Reporters of THE WALL STREET JOURNAL Intel Corp. is stepping up a new campaign to seize control of the fast-growing graphics-chip market, using both homegrown technology and external investments. The Santa Clara, Calif.-based company said it has developed a new set of proprietary instructions for handling advanced graphics functions, which could have far-reaching consequences by allowing Intel's micropressors to perform functions that now require separate graphics chips. Separately, Intel bought a 20% stake in Real 3D Inc., a key Intel partner in graphics that Lockheed Martin Corp. spun off Wednesday as an independent company. Intel's announcements come one day after the Federal Trade Commission approved, with reservations, Intel's proposed purchase of graphics chip maker Chips & Technologies Inc. The new moves are likely to draw additional scrutiny from the FTC, which is conducting a broad investigation of Intel's business practices and has indicated that it is particularly interested in whether Intel could improperly wield its market power in graphics through the Chips & Technology acquisition. Executives' View Intel executives argued that the efforts are all designed to improve the experience of computer users. The company's new set of instructions, for example, tells a chip how to execute three-dimensional graphics software faster and more efficiently than today's microprocessors. Hence, PC users are expected eventually to see more realistic games and visual-design programs. "This is all part of our effort to bring visual computing to the personal computer," said Ron Smith, general manager of Intel's computing enhancement group. Intel wields much of its current influence over the computer market by the underlying set of instructions used in its microprocessor chips for personal computers. Its latest technology, dubbed the "Katmai" new instructions, follows a 1996 graphics advance called MMX that Intel has successfully popularized in microprocessors. This time, however, Intel isn't sharing the specifications for the new instructions with competitors such as Advanced Micro Devices Inc., Cyrix Corp. and Integrated Device Technology Inc. Dean McCarron, an analyst at Mercury Research in Scottsdale, Ariz., said Intel's move to keep the technology proprietary has forced those companies to develop rival, incompatible graphics instructions on their own. As a result, makers of computer programs will be faced with the choice of choosing among technologies to support, or rewriting programs to exploit different chips. Microsoft's Plan Carl Stork, general manager of Microsoft Corp.'s Windows division, said his company will support all of the rival instruction sets and can insulate software developers somewhat by allowing them to write programs to a common interface that in turn supports all of the different chips. Richard Dracott, an Intel marketing director, said the company changed strategies because it believed it could succeed with a proprietary approach. It plans to spend more heavily on development subsidies and other incentives to persuade software developers to focus their development on its technology. Steve Tobak, vice president of corporate marketing at Cyrix, a subsidiary of National Semiconductor Corp., said releasing MMX publicly "was the smart thing to do to ensure the industry continues to grow and flourish. Not to do that with the second generation is a mistake that hurts the industry." For the past two years, Intel has worked with Real 3D and Chips & Technologies to produce a graphics chip that will mark Intel's entry into the 3-D market. The chip, called the I740, is expected to be released later this quarter and pose a challenge to an estimated 40 other smaller graphics chip companies. Those companies will be under pressure to advance their graphics technology to perform tasks Intel's Katmai microprocessors won't be able to handle. The companies didn't disclose details, but sources familiar with the deal said Intel's stake in Orlando, Fla.-based Real 3D is worth an estimated $40 million, giving the newly formed company an indicated capitalization of $200 million.