For over a decade Intel’s near-monopoly hold on the PC microprocessor market has looked impregnable. Cloners of the Intel x86 chip designs – principally AMD, Cyrix and NexGen – have been little more than an irritation to the potentates of Santa Clara. But since launching its K6-MMX rival to the Pentium II in April, AMD […]
For over a decade Intel’s near-monopoly hold on the PC microprocessor market has looked impregnable. Cloners of the Intel x86 chip designs – principally AMD, Cyrix and NexGen – have been little more than an irritation to the potentates of Santa Clara. But since launching its K6-MMX rival to the Pentium II in April, AMD has been making significant inroads. Most significantly, the 25% lower cost of the K6 has persuaded some of the major names in PCs (IBM, Acer, DEC, Fujitsu and Vobis), as well as a multitude of ‘no-name’ PC makers, to use the chip in some of their low and mid-range offerings. That success has inspired a one-time household name in microprocessors, National Semiconductor, to think it can work similar magic at Cyrix, the struggling, much smaller cloner. According to National, its $536m acquisition of Cyrix announced in July is the first move in a strategic program designed to push the US company back into the top tier of the semiconductor industry. And it may have taken Cyrix at just the right time. While Cyrix’s revenues tumbled 19% in 1996 to $183.8m, the company is now just hitting the sweet spot of a duo of new product cycles. In recent quarters its new 6x86MX low-end microprocessor line and the MediaGX graphics chip have been selling well. National Semiconductor certainly has the cash and the global reach to better exploit that technology, and as more consumers clamor for sub-$1,000 PCs, the acquisition positions it well to meet demand for ultra-low cost chips (Cyrix tries to undercut Intel by about 50% and AMD by 25%). Keeping true to its ‘Only the Paranoid Survive’ maxim, Intel counter- attacked last month in an effort to corner yet another niche of the semiconductor market – this time, the laptop graphics chip market – with the purchase of San Jose-based graphics accelerator chip vendor Chips and Technologies for around $400m. Chips & Technologies has about a 40% market share in two-dimensional graphics chips for portable computers, which is one of Intel’s hot priorities given that portable computers are selling faster than desktop models. The acquisition also accelerates Intel’s foray into more advanced three-dimensional graphics chips for desktop computers, as Chips and Technologies has been working with Intel to co-develop a 3D graphics chip under the codename Auburn. That product is due early 1998. The move looks threatening to some of Chips and Technologies’ Silicon Valley neighbors, in particular Trident Microsystems, which views Intel’s foray into portable PC chips as an endorsement of its own strategy.