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To: I. N. Vester who wrote (6493)	2/12/1998 12:51:00 AM
From: flickerful	Read Replies (1) \| Respond to of 11555

Toy Industry Snacks On Chips (02/11/98; 6:58 p.m. EST) By Mo Krochmal, TechWeb <Picture>Chips are permeating the $22-billion-a-year toy industry, and nowhere was that more evident than this week at the 95th American International Toy Fair, where more than 6,000 new toys made their debut. Last week, Intel and Mattel announced a joint venture to create new toys that use chips, and Intel will soon sign a similar agreement with Hasbro. Mattel and Hasbro account for more than half of the toy industry's annual revenue. "After personal computers and televisions, toys use chips in some volume," said Dan Klesten, a semiconductor analyst at BancAmerica Robertson Stephens. "Over time, it could be a sizable business." Last year, Microsoft introduced a silicon-powered Barney doll that interacts with a PC and television. The Redmond, Wash., software company was back this year with two more chip-powered dolls, known as Actimates. And Lego, the plastic block toy manufacturer, is also introducing a plastic "brick with a chip," which can be assembled and programmed through a PC. But the goal is not simply to embed a piece of silicon in every toy, said Joshua Weinberg, an Intel spokesman. "We want to be a technology enabler," Weinberg said. "We can bring a lot of expertise to the table and we can help with their harnessing of the home PC." These days, consumer goods comprise only about 5 percent of the total chip market, which is awash in capacity, Klesten said. But the sudden popularity of some toys has created some problems for toy makers. For example, last year Bandai sold 40 million Tamagotchis, the egg-shaped digital "pets" coveted by children. That caused a run on the simple chips used in many consumer electronic devices, including toys. In Taiwan, foundries were pumping out between 20,000 and 30,000 8-inch wafers every month -- 10 to 15 percent of capacity -- just for Tamagotchis. While some toy makers scrambled to find an adequate supply of chips, New York-based Play-Tech, which makes toy laptops for preschoolers, was protected by its relationship with a Hong Kong chip manufacturer. Competition for chips can be fierce, which is why Kim Lobdell, Play-Tech's vice president of marketing, was reluctant to name the company's supplier. "We were lucky we weren't affected," Lobdell said.