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Intel faces pressure over new chipset

The introduction of a new set of chips from the processor company isn't going as smoothly as it would like.

Giant Intel is continuing to have problems with the introduction of a somewhat mundane product that enables the main processor work with the rest of the computer.

Next Monday, Intel will debut its 820 chipset, but the advanced set of ancillary processors has been resisted by PC manufacturers. The 820 utilizes a new memory technology called Rambus, but PC makers so far prefer the established standard, synchronous dynamic random access memory (SDRAM), which is cheaper.

Analysts say that the 820 is facing limited demand, and at least one asserts that Intel has reduced its production plans.

"Intel has significantly scaled back their short-term expectations," according to Ashok Kumar, an analyst with U.S. Bancorp Piper Jaffray. The company had planned for the 820 chipset to account for 20 to 25 percent of the chipsets it makes, but has reduced that number to 5 percent, he said.

This isn't the first time the leading chipmaker has adjusted its 820 plans, as it works to balance its own goals for the innards of a PC with what the companies that build computers actually desire. Intel previously abandoned its earlier stance and accommodated manufacturers' desires to use conventional memory running at somewhat higher speed instead of jumping straight to the "next-generation" Rambus technology. And the 820 chipset itself was delayed three months.

Intel says it has billed Rambus not as a miracle cure for PC performance, but as a necessary step if computer systems are to take advantage of ever-faster processors.

"There will be a transition between SDRAM and RDRAM [the Rambus technology] over the next couple years," said Intel spokesman Dan Francisco. "Ultimately, the market will decide the rate that transition takes place."

Francisco declined to discuss Intel's plans for how many of the 820 chipsets it would make, but said: "The 820 is on schedule to go in late September. System manufacturers want to do systems on their own schedules."

Micron avoiding the 820
One manufacturer, Micron Electronics, has already decided to use a rival chipset from Via Technologies, because it allows the PC maker to get the same performance the 820 provides while cutting $200 to $300 off the price tag of a system, said product manager Robert Wheadon. The Via-based systems will show up at the top end of Micron's line in systems using 600-MHz or 533-MHz Intel chips, he said.

Micron's speed testing has shown that both the Via chipset and the 820 show an increase of 5 to 6 percent on special speed tests and an increase of 3 to 4 percent over current Intel chipsets in real-world tasks, Wheadon said.

Francisco said Intel's position has been that customers "aren't going to see some astronomical difference." On office software, the performance will be "comparable," but on memory-intensive tasks such as editing images with Adobe Photoshop, Rambus systems will show an improvement.

But Micron is more enthusiastic about a later chipset, Intel's 840 or "Carmel" product, due in the first half of 2000. The Carmel chipset will have two channels the main processor can use to talk to main memory, doubling the bandwidth and making the computer better able to utilize Rambus' theoretical capacity.

Scaling back 820 production
The reason Intel would scale back its production plans is simply lack of demand, said MicroDesign Resources analyst Peter Glaskowsky. "It's going to be very difficult for Intel to sell a lot of those chips" because of the high price of Rambus memory," he said.

A system with the 820 chipset and 128 MB of Rambus memory will cost a manufacturer another $300 to make, Glaskowsky said. That cost will translate to another $500 added to the price the end customer sees, he estimates. Except for a very few people such as gamers and users or large databases, "that's a pretty much unacceptable price penalty," he said.

Another price effect has been that most computer makers are likely to adopt lower-speed versions of Rambus memory, said Shawn Willett of Aberdeen Group.

"I would expect most to go with the 600-MHz Rambus because of the costs associated with the 800-MHz chips and the difficulty in getting it," Willett said.

Francisco didn't comment on how popular the different speeds would be, saying only that Rambus will be available and used in 600-, 700-, and 800-MHz speeds at the time of launch.