Intel Corp's plan to bundle three laptop computer chips together could hurt the local notebook manufacturing industry, analysts said yesterday.
Intel, known as the world's largest computer-chip company, currently supplies chips for 80 to 90 percent of the notebooks produced in Taiwan. However, its chips are often combined with compatible chips from other manufacturers.
If the new "all-in-one" package is accepted by the market, these choices may disappear.
"Intel has virtually dominated the market, now they want to make sure they [totally] dominate it," Stephen Tseng (
Laptop computers or notebooks have three key chips. The processor and the chipset serve as the brains and central nervous system of the computer respectively. The communications chip controls how the computer connects to Internet and office data networks.
Next year, Intel is expected to introduce the bundle of three computer chips which it says is designed to improve the performance, battery life and wireless communication capabilities of notebook computers.
The chip bundles will be offered to notebook makers at a discount to encourage the manufacturers to buy them.
Some industry leaders have balked at the scheme. "If you standardize, you hurt the industry," a report in a Chinese-language newspaper said yesterday, quoting Barry Lam (林百里), CEO of the world's largest notebook manufacturer, Quanta Computer Corp (廣達電腦). "Different sports cars have different engines. Differentiation is a competitive advantage for manufacturers," Lam is quoted as saying.
Intel denies that it is restricting customer choice. "When we launch, there will be two options: the processor alone, or the processor plus the chipset plus the communications chip," said Deborah Yan (顏亦君), marketing programs director at Intel in Taipei.
"[The processor] will work with other chipsets and communications chips. There will still be as many choices as before," Yan said.
"If the [manufacturer] chooses just the chip, they can choose whatever they want to go with it," she said.
"With the processor plus chipset plus communication chip package, manufacturers can save money," she said.
Chip design companies such as VIA Technologies Inc (
Tseng suggested that VIA would be affected if Intel's biggest rival, Advanced Micro Devices Inc (AMD), lost market share since VIA designs the chipsets for AMD's processors.
SiS would also be affected, as it is a major chipset manufacturer. If Intel dominates the chipset options that notebook manufacturers have, SiS may be squeezed out, Tseng said.
By having more purchase options, manufacturers are able to get better deals. "Choice is price. Look at the competition between Intel and AMD. AMD offers lower prices than Intel," Tseng said.
AMD makes up between 10 and 20 percent of the notebook market.
Another Intel rival, Transmeta Corp, has a much smaller market share.
Transmeta makes processors that use very little power, affording much longer battery life. Intel's new processor will directly compete with the Transmeta product on power consumption.
"By launching the [new processor] Intel is trying to kick out Transmeta," Tseng said.
Hewlett-Packard Co and Dell Computer Corp are the world's largest suppliers of notebooks. They both favor Intel chips, but do not use them exclusively.
"Of course, less choice is a problem. If HP and Dell adopt the new Intel platform, then this will further squeeze companies' profit margins," said Eve Jung (
"The impact will be sector wide," Jung said.
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