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To: Duker who wrote (7004)	3/4/1999 6:17:00 PM
From: Duker	Respond to of 7841

TI readies 'superchip' for hard-drive segment By J. Robert Lineback A service of Semiconductor Business News, CMP Media Inc. Story posted 5 p.m. EST/2 p.m. PST, 3/4/99 DALLAS--Though Texas Instruments Inc.'s revenues from digital signal processors grew 29% to about $2 billion in 1998, TI management was not happy about DSP and analog sales in the hard-disk drive segment. To quickly fix the problem in 1999, TI today said it will introduce a "superchip" that integrates five ICs for hard-disk drives into a single CMOS device. The superchip will pack a read-channel function with DSP, control logic, interfaces and memory in a single IC, and it potentially could be the biggest cost cutter in personal computers during the next couple of years, according to Steve Sutton, vice president of TI's Storage Products Group. In addition to being able to serve a growing market for cheaper storage in low-cost PCs, TI also hopes to reverse its loss of market share in read-channel chips. During 1998, TI's slow transition from an analog to digital architecture for the channel function caused it to slip to second place behind Lucent Technologies Inc., said TI managers during a briefing in Dallas for analysts and the press. The slip resulted in Sutton taking over TI's Storage Products Group in January. The group includes Silicon Systems Inc. of Tustin, Calif., which was acquired by TI in 1996 for about $575 million from Japan's TDK Corp. During today's briefing, managers said the SSI operation had become too focused on shipping analog-based channel chips while competitors were gearing up for new digital channel architectures. Sutton said a "channel recovery plan" was in place, and the Storage Products Group had assigned over 100 engineers to focus on CMOS digital channel designs. Samples of the first digital channel ICs for drives are expected to be available in the second quarter. But a much bigger potential for gaining market share in hard-drive ICs is looming as chip makers attempt to come up with lower-cost solutions for desktop PCs, Sutton said. "I believe 1999 will be a pivotal year in this segment," he told the analysts and media. According to TI, the race is now on to reduce the chip count in hard drives from about nine components to four devices. In TI's planned superchip will contain everything but the preamp, motor/servo control function and buffer memory. "The No.1 cost reduction opportunity in desktop PCs is the integration of the superchip," Sutton said. "We expect a major discontinuity to occur. There will be big winners and big losers," he added, referring to IC suppliers in the hard drive segment. TI figures that the big winners will come from a group of four suppliers that serve the digital functions and read-channel portion of the hard-drive market. These companies are TI, IBM, Cirrus, and Lucent, according to Sutton, who added that any supplier counting on independent foundries to support the superchip will find it difficult to keep up with fast-changing customer requirements. If so, he suggested, Cirrus Logic Inc. could have difficulty. TI corporate managers believe the DSP-based superchip could be one of the company's biggest growth potentials in the near future. "We have a potential to hit a home run in the mass storage business with the ability to integrate a digital CMOS read channel with the rest of the functions," said Tom Engibous, TI chairman, president and CEO. He sees an opportunity to start a major shift in hard-drive chip architectures, and "it could result in one of the largest growth segments in DSP." TI's superchip will be introduced in the second half of 1999.