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Exponential lays off 25%

The chipmaker, which has been developing a highly touted 533-MHz PowerPC processor, is laying off 25 percent of its workforce.

Exponential Technology, which has been developing a highly touted 533-MHz PowerPC processor for Apple Macintosh computers, announced today that it is laying off 25 percent of its workforce, casting a pall over its entire market strategy.

The layoffs affect employees at the company's offices in San Jose, California, and Austin, Texas. Some 70 people will remain with the company after the reduction.

Exponential's highly anticipated X704 processor, running at 533 MHz, was originally planned for release this July. Instead, a significantly slower 410-MHz version will likely ship in the third quarter, the company said.

Though a faster version may be ready late in the third quarter, the window of opportunity is closing. IBM and Motorola continue to close the performance gap with increasingly faster PowerPC processors.

The X704 processor is a PowerPC-compatible chip designed for processor-intensive applications, including desktop publishing, multimedia authoring, and image processing.

The problem is that a market for Exponential's processor hasn't emerged as originally hoped, according to Rick Bergman, vice president of marketing for the company, in explaining the reasons for the layoffs. "We had hopes to sell it to all the Mac vendors," he said.

Apple Computer, a major investor in Exponential, has also expressed interest in using the processor, but it continues to waver in its support of a truly competitive market for systems based on the PowerPC Reference Platform and its own upcoming Mac OS 8 operating system.

Moreover, Apple has not yet made a decision on whether to license the use of a special ROM chip that would make the X704 compatible with the Mac OS 7.x, industry sources said. The upshot: Without some help from Apple and without these new technologies, clone vendors can't use Exponential's chip.

Bergman says the company is in the midst of getting another round of financing to expand production of its processors. One company that has expressed interest in Exponential's technology is Power Computing.

"Power remains very enthusiastic about the future of Exponential's product road map. While we have not made any product announcements to date, we continue to work closely with them and evaluate opportunities," says Mike Rosenfelt, marketing manager for Power Computing.