In Taipei yesterday for an education forum, the president and CEO of the world's largest semiconductor maker said his company planned to fight for the chipset business, a sector in which VIA Technologies (
"It [chipsets] is considered to be an important part of our business and yes, we're introducing new products and yes we expect to be very competitive," said Craig Barrett, CEO of Intel. "We're looking to improve our market share."
The speed with which VIA picked up market share in the chipset business this year led many analysts to speculate Intel could not compete with the lower manufacturing costs VIA enjoys in Taiwan. But according to Barrett, analysts need to think again.
PHOTO: CHIANG YING-YING, TAIPEI TIMES
"[We had] record sales in Q3 and we expect to beat that record in Q4 for total number of chipsets sold," he said. "There is no free lunch in this business ... and we will respond to competitive pricing, there's nothing really new in that."
There were also signs yesterday the company had refused to license VIA to make chipsets for the Intel Pentium IV set to launch next month. Barrett said Intel had "already opened [the license] up to some suppliers," but VIA officials did not want to comment on whether they had received a license.
"We have been developing a solution to that [licensing] problem ... but we cannot say anything right now," said one official who requested anonymity. "We will make an announcement within the next few days."
Whether Intel gives VIA a license or not, however, may not matter. Intel refused a chipset license to VIA for Pentium III microchips, but VIA went ahead with production anyway. Intel then sued for payment of licensing fees and won a settlement in the US last July.
"They [VIA] will still develop a Pentium IV chipset," said Andrew Teng (
Teng also pointed out the danger of creating bad blood between VIA and Intel. Intel, said Teng, cannot produce enough chipsets to keep up with demand for its own microchips, the core piece of the company's business. VIA helps bridge that gap in demand. The Taiwanese firm also helps Intel compete with US-based Advanced Micro Devices (AMD), Intel's toughest competitor in upper tier microchips.
AMD beat Intel to be first to market with a one Gigahertz (GHz) microprocessor. The company then followed up on the victory by producing the first 1.4 GHz microprocessor, months ahead of Intel's scheduled launch of the Pentium IV next month. The Pentium IV should run at 1.4GHz to 1.5GHz, according to Barrett.
Intel had trouble competing on price with AMD this year due to the latter's use of a less expensive technology on its VIA made chipsets.
High-end Intel microprocessors have to be used in conjunction with Rambus memory chips, a type of memory at least "30 percent more expensive" than competing technologies, according to Teng.
Although Intel is required by contract to make all its chipsets with Rambus memory, VIA is not bound by any such contract. Intel chips set on chipsets made by VIA can use lower cost memory chips, helping them compete with AMD on the market.
When asked if the company planned to offer rebates to local manufacturers who would have to use expensive Rambus memory, Intel's Barrett said that Rambus-based chipsets would be "priced attractively" for the market.
But the sizable price difference between Rambus and competing technologies prompted Teng to reply, "That sounds very unrealistic, people want high performance PCs, but at a low cost. Rambus is not low cost."
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