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Intel gets low-cost RISC chip

The chip giant agrees it will produce Advanced RISC Machines' StrongARM microprocessors, used in handheld devices and other low-cost appliances.

Intel (INTC) announced today that it has reached an agreement with Advanced RISC Machines (ARM) to produce StrongARM microprocessors used in handheld devices and other low-cost appliances, allowing the world's largest chip maker to compete in a potentially huge market outside of the PC sphere.

The deal, which is still subject to approval by the Federal Trade Commission, would give Intel an overnight presence in a growing market that it has yet to crack. The StrongARM processor can be used in a variety of inexpensive computing devices, including cell phones, modems, consumer game machines, and Network Computers.

StrongArm has a strong reputation as a chip that delivers a lot of performance at little cost. It is widely used in high-performance portable devices since it is frugal on power. Apple employs the chip in its MessagePad 2000, a handheld, while Wyse uses it in certain terminals.

Digital Equipment currently makes the StrongARM chip, but transferred the rights to the processor to Intel in a massive legal settlement surrounding patent disputes last Fall. Under terms of the deal, Intel will continue to manufacture the StrongARM chips currently made by Digital and in all likelihood develop future models, said an Intel spokesman.

While the StrongARM chip comes with a market, the deal also alters history at Intel. Manufacturing and developing StrongARM chips would mark the first time that Intel would be making chips that it has not designed itself, noted Jim Turley, an analyst with MicroDesign Resources. ARM controls the overall chip architecture. Intel, like Digital, will be a licensee. The decision to support StrongARM chips likely came after a signficant amount of in-fighting at the company.

"This is a big emotional hurdle for the folks at Intel," he said.

Decision to support StrongARM, in fact, may have come about as a result of Intel's inability to come out with an economically viable low-cost, low-power chip based around the Intel architecture. Late last year, Intel said it would release a low-powered chip based around the Intel architecture for low-cost computers and terminals, dubbed by Intel as "lean clients."

Little has happened on the "lean client" front since, however. When asked, at least one analyst had to be reminded what it was. Lean client chips were not mentioned in any of the keynotes at last week's Intel Developer's Conference, though Intel general manager Pat Gelsinger did say that a specification for the chip existed, but did not provide many details.

"I think that was all just a PR move," said Turley, who recalled that Intel had shown little outward indication that it was aggressively developing a chip for the low-cost, low-power segment.

Turley further pointed out that Pentium chips do not fit the lean client profile. Those chips cost close to $100. StrongARM costs $29 in volume while competing chips cost even less. They also consume too much power.

"Eight watts is a hell of a lot of power on double AA batteries," he said. "StrongARM on a bad day consumes maybe a half a watt."

As a further advantage, StrongARM is relatively compatible with other ARM chips made by Texas Instruments and others. Thus, Intel can aim at expanding StrongARM markets by targeting existing designs on the market. An ARM spokeswoman further added that more StrongARM-based products will be announced in the near future.

StrongARM makes sense economically as well, pointed out Dean McCarron, principal analyst at Mercury Research. Adopting the chip means that Intel can cut development costs in a market that still remains uncertain.

"You don't spend $100 million to attack a market that doesn't exist," he said. "They need to have a presence here because the financial analysts will kill them if they don't."

While Intel is likely keeping an eye on developing their own low-powered chip, "they may very well adopt StrongARM as a core element" of their low-cost computing strategy," he added.

Financial terms of the agreement were not revealed. Intel is an investor in CNET: The Computer Network.

"We believe the StrongARM processors have tremendous potential in the market. High-performance, low-power microprocessors are essential to the future of a variety of portable devices and other consumer electronics applications and embedded applications," said Ron Smith, vice president and general manager of Intel's Computer Enhancement Group, in a prepared statement.

"Once we obtain regulatory approval, our plan is to continue to enhance and improve the product. We also plan to grow the customer base as well as provide support for existing customers," Smith added.

The agreement covers Digital's SA-110, SA-1100, and SA-1500 microprocessors, as well as products under development. The StrongARM chips boast clock speeds to 200 MHz while consuming less than 250 milliwatts of power.