Intel to delay next-generation mobile chip

The chipmaker said on Wednesday that it has pushed back the launch of Dothan, its next Pentium M notebook processor, in order to make changes to the chip's circuitry.

The Dothan chip had been expected to make its debut in mid-February. It is now scheduled to ship in the second quarter of 2004, Intel President Paul Otellini said on Wednesday during a conference call to discuss Intel's fourth-quarter earnings.

Validation tests turned up a glitch that would hamper the manufacturability of the chip, according to Otellini. Dothan is Intel's first notebook chip to be manufactured on a 90-nanometer process.

Although Dothan's performance was not affected by the glitch, a circuitry redesign was required, according to Otellini. That redesign caused Intel to miss its goal of beginning shipments in the past quarter, he said. Intel will offer the fix in a new version of the chip, which it calls a "stepping" internally.

"We have redesigned the circuits and have already seen functional silicon resulting from the fix. In the interim we'll meet all of our commitments with the existing version of the Pentium M. We expect no significant impact to (first-quarter) revenue or our 90-nanometer (manufacturing) ramp for the year."

Outside of its potential to anger customers, the delay might not be too serious for Intel, because it already has a new version of the chip in hand, said Dean McCarron, an analyst at Mercury Research.

"Being conservative, you're probably looking at about two months. It's more likely to be (launched) in the beginning of (the second quarter) then the end," he said. "If something cropped up after the part went out, that would have hurt it (more). All this really affects is the availability of some of the faster, newer (Pentium M) parts."

Ramping up to 90
Intel was able to ship Prescott, its upcoming Pentium 4 chip, during the fourth quarter, even though it did not escape changes. Otellini said during Intel's third-quarter earnings call that the chip had been tweaked to increase its clock speed potential. The chip, Intel's first 90-nanometer desktop processor, is expected to come out early next month.

Prescott and Dothan--when available--will offer higher clock speeds and some other performance improvements, Intel has said. However, an important attribute of the chips for the company will be their lower manufacturing costs. Because they are minted using Intel's latest 90-nanometer process, the chips will have smaller internal features. That measure helped Intel reduce their size yet boost their performance, relative to its current crop of 130-nanometer chips, Otellini said.

That smaller size coupled with the use of larger, 300-millimeter wafers--the silicon platters upon which chips are manufactured--will allow Intel to cut its per-chip costs, lowering its manufacturing costs over the next few years, according to Otellini.

Prompted partly by these lower costs, Intel intends to rapidly boost production of its 90-nanometer chips.

Supplies of Prescott may be tight at first, but Intel plans to rapidly increase production of the chip throughout 2004, Otellini said. Prescott is expected to represent more than 50 percent of shipments of performance desktop products from Intel in the second quarter.

It will also make up a significant percentage of shipments of chips for lower-cost PCs as well, Otellini said, suggesting Intel will offer a number of variants on its Pentium 4 with different clock speeds, all based on Prescott, or build its Celeron chip on circuitry from the new processor. Some sources suggest Intel will do both.

The switchover to Prescott "will be our fastest ever and will allow us to quickly transition our desktop products to 300-millimeter wafers, lowering our unit costs over the next couple of years," Otellini said.

Intel is likely to drive as quickly as possible toward shipping predominantly Prescott and Dothan processors, according to analysts.

While Prescott itself "is a new product, going on a new process, with a much larger cache?the manufacturing and financial situation is such that (Intel) is going to be moving very aggressively to it," McCarron said. "This transition is beneficial to it from a manufacturing-cost perspective: Margins are better; it costs less to build the parts. That's a pretty big incentive for it to move every product it can into it."