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SiS eyes Intel-compatible chips with Rise deal

Although few companies are making money on low-cost PC processors, Silicon Integrated Systems announces that it will likely start producing inexpensive Intel-compatible chips through a licensing deal with Rise.

Although few companies are making money on low-cost PC processors, Taiwan-based Silicon Integrated Systems today announced that it will likely start producing inexpensive Intel-compatible chips through a licensing deal with struggling Rise Technologies.

SiS, which makes chipsets, graphic chips, and other computer components, announced today that it is licensing intellectual property from Rise that will allow it to manufacture Intel compatible microprocessors.

SiS did not identify products or lay out a road map. Nonetheless, the company said in a statement that the deal roughly positions it as a leading supplier for delivering its part in "future high-integration solutions" with the best cost and performance.

Integrated processors combine a microprocessor core with other elements, such as a graphics processor, onto one piece of silicon to save money.

With the Rise license, SiS will become the second Taiwanese company this year to enter into this market. Earlier, Via Technologies bought the microprocessor divisions of National Semiconductor and IDT.

SiS already owns a number of assets that give it an opportunity to turn a profit in this market. Unlike Via, SiS owns its own chip fabrication facilities, which will likely lower the manufacturing costs. SiS does not have to license graphics technology for an integrated chip.

Analysts, however, will likely view any plans with a heavy dose of skepticism. Steep price declines in this market have decimated the profit picture for most of the competitors. National and IDT sold their microprocessor divisions to Via after failing to turn a profit. AMD has lost several million in the past two quarters because of low-end chip prices.

Even Intel has been hurt. The company yesterday said that the average selling price for its chips declined over the past quarter. Although the company made approximately $1.9 billion in profit minus acquisition costs for the third quarter, the end result was lower than analysts' expectations.

Rise has had no easy time either. The company recently planned on detailing its "Tiger" microprocessor at the Microprocessor Forum in San Jose, California. But when the conference arrived, Rise pulled out and stated that it was rethinking its strategy.

"Look at all the companies being bought and sold," said Joe Salvador, a senior executive at Rise last week. "We have to decide where to put our resources."

As a company, Rise has also had very limited success in sales. It released its first chips last year but sold few of them, according to analysts, and most in overseas markets. Rise's chips had also fallen behind in terms of megahertz compared to its competitors, analysts said.