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PowerPC chip venture ends

Motorola and IBM announce that the chip design center they operate jointly will now be wholly owned by Motorola.

Motorola and IBM closed the door on an era today, announcing that the PowerPC chip design center the two companies have operated jointly in Austin, Texas, since 1992 will now be wholly owned by Motorola.

The two companies said that they will continue to cooperate on future PowerPC designs and compete for sales to Apple Computer, the only volume customer today using the PowerPC processor in a desktop computer.

IBM employees at the facility known as Somerset will be offered jobs with Motorola, the company said. Chips will continue to be manufactured at separate facilities.

The two companies parted ways recently on a technology called AltiVec, which Motorola has touted as a powerful new technology for boosting the performance of the PowerPC processor. IBM did not endorse the technology and is taking a wait-and-see approach.

The Somerset design facility had been funded jointly and operated by IBM and Motorola in an effort to expand their share of the market for desktop processors, but today's move reflects an ongoing trend by both companies to focus on the rapidly expanding market for "embedded" chips. These chips are typically found in handheld devices and consumer products.

Analysts believe there may be some significant public-relations fallout from the announcement for Apple, but that overall the market for PowerPC chips won't be affected much.

"This is more a kind of emotional thing that these two companies that started out with bold prognostications have decided that [the joint operation] won't work out. There are certainly lots of negative connotations associated with [this decision]," said Jim Turley, senior analyst with the Microprocessor Report. Mostly, he added, the transition is "kind of a public relations blow to PowerPC and the Somerset ideal."

That "ideal" was the alliance of IBM, Motorola, and Apple to challenge Intel's dominance in the desktop processor market by offering a high-performance chip based on RISC architecture. That goal was never met from a market share standpoint--and with the desktop chip market linked to Apple's shrinking piece of the PC market, IBM and Motorola have each taken a number of steps recently to increase their focus on other market opportunities.

Motorola said it will work on expanding its offering of chips to networking, telecommunications, and other markets for embedded processors. Eventually, Motorola said it plans to increase the number of employees at Somerset due to higher demand for embedded versions of PowerPC-based chips.

These markets are driving the advancement of desktop PC technology now, said Will Swearingen, marketing manager with Motorola. He argues that demand for ever-increasing levels of performance--and increasing sales--will help subsidize development for PowerPC technology that can be used in Apple's desktop systems.

According to Swearingen, the announcement won't have an effect on plans for future PowerPC processors in the desktop market. The "G4" 32-bit chip with AltiVec technology, Motorola's response to Intel's MMX multimedia technology, will be in sample production later this year, he said. Faster versions of the chip manufactured with the "copper" process will be in production in early 1999.

Furthermore, there are chips on the drawing board which will be competitive with Intel's 64-bit Merced chip due out in 2000, Swearingen said while declining to give further details.

IBM, for its part, will continue to develop high-performance PowerPC processors for use in existing IBM server systems, as well as products for use in customized chips needed by its customers.

Two of Big Blue's four server lines rely on advanced PowerPC microprocessors. In addition, PowerPC microprocessor technology is one of the foundations of a high-growth custom chip business, said Douglas Grose, vice president of operations, technology, and strategy at IBM's microelectronics division, in a prepared statement.

Development activity in these two areas will be applied to meeting future requirements for desktop PowerPC microprocessors, he added.

Earlier this month, Motorola said it would team up with Lucent Technologies to develop digital signal processors for use in devices such as cell phones. The two companies will open a chip design center in Atlanta. IBM chimed in yesterday, saying it would expand its efforts in the DSP and custom chip business by adding design engineers and expanding support for popular design software to help manufacturers integrate IBM custom chip technology into a broader variety of electronic products.

IBM and Motorola also will continue work on their joint efforts to promote PowerPC development for use in the embedded market, the companies said.