National teams up with Avanti

National will buy Avanti tools to manufacture system-on-a-chip processors, a growing trend in the chip arena.

National Semiconductor has struck a deal with Avanti Corporation to purchase tools to manufacture system-on-a-chip processors, the companies announced today.

National will purchase these tools in an effort to expand its presence in the integrated chip market. By replacing separate audio, video, graphics, and networking chips with one integrated "system-on-a-chip," PC makers can significantly reduce their manufacturing costs, enabling much lower priced systems.

This market is expected to rapidly expand over the next few years, following the growth in popularity of low-cost PCs and set-top Internet appliances. It could rise to $1.6 billion by 2000, according to Mercury Research.

In fact, Intel executives said at Comdex that the company will develop integrated chips for low-cost PCs and set-top boxes in the future.

National will purchase a suite of Avanti's Very Deep Sub-Micron tools, (VDSM) in what is described as a "multi-million dollar deal." More specific financial details were not disclosed.

National currently uses tools from Cadence in integrated chip manufacturing, a relationship that will not be affected by the Avanti deal, a National spokesman said.

"We're not giving those up, but Avanti's tools have features we like for certain things," the spokesman said. "This will be used in next generation stuff, which is probably still a year or two out."