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Broadcom chip melds Web, TV

The chip allows split screen viewing with resizable screens, but analysts wonder what all the fuss is about.

Broadcom announced a new chip for TV set-top boxes today sending shares in the broadband chipmaker above its 52-week high, although 3D experts are wondering what the fuss is about.

The advanced graphics chip allows set-top box manufacturers to design systems that allow users to view television shows and Web sites on a standard TV screen at the same time with separate, resizable windows.

The split screen would allow text, graphics, and video on a television screen. The graphics accelerator chip also offers 3D capabilities.

But many analysts said the new chip, which Broadcom is touting as "a breakthrough technology" is not that new.

Current 3D graphics chips already perform video functions and can offer "split screen" viewing experiences, said Peter Glaskowsky, senior analyst at MicroDesign Resources. Broadcom's new chip allows a developer to program the 3D portion of the chip--a function that will allow set-top makers to add special application features--but that's not an exclusive either.

"I don't see anything that is particularly exciting here," he said.

What could help the chip, potentially, is the Broadcom name. The company is riding a crest of success by providing chips that enable broadband communication, he said. The company sells chips for cable modems and DSL modems.

Still, Broadcom faces a tight market. More than 40 companies sell graphics chips and many have recently reported difficult financial quarters.

Broadcom's chip, in fact, is already something of an also-ran. The company developed the chip in an effort to land a contract with General Instrument, according to Jon Peddie, principal consultant Jon Peddie Associates, a Bay Area-based consulting firm.

General Instrument, earlier this year, wanted a 3D vendor for its set-top box contract with cable giant Tele-Communications Incorporated. General Instrument chose graphics leader ATI Technologies. Despite losing the bid, Broadcom has apparently decided to release the chip anyway.

Although the chip is interesting, there isn't much application for it now, said Peddie. There is no 3D content on cable and very little on the Web. Technology like this will be more important toward the year 2000.

Broadcom shares peaked nearly 9 percent higher at 97.75 earlier in the day before settling at 93.5--an increase of more than 8 percent--in midday trading. Shares have traded as high as 89.75 and as low as 47 in the past year.

The new chip in many ways is more about Broadcom entering new markets, rather than new technology, analysts said.

The chip rounds out Broadcom's product offerings for set-top boxes, said Rich Nelson, director of marketing for Broadcom. Essentially, the company wants to be a one-stop shop for set-top chips.

The company currently sells modem chips and video decoders. Recently, it signed a deal to license processor designs from MIPS so that Broadcom can make its own low-cost processors. Graphics are the next logical area for the company.

While he admitted that the graphics market is crowded, Nelson said that Broadcom will make its mark by specializing in graphics chips specially designed for set-top boxes and presenting images on TV screens.

"We feel they (PC graphics vendors) don't bring an optimal solution to the TV marketplace," he said. Nonetheless, he noted that some of the PC graphics companies are providing silicon for set-top vendors, including General Instrument, which is an investor in Broadcom.

The chip is available in samples now and will be ready for volume shipment in the first quarter of 1999.

Broadcom had a successful initial public offering in April when shares jumped more than 120 percent on the first day of trading.