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New chip may slice cable modem prices

With Broadcom in its sights, Conexant Systems develops a programmable chip that may cut the price of cable modems in half.

    With Broadcom in its sights, Conexant Systems said today it has developed a programmable chip that may cut the price of cable modems in half.

    Conexant, the semiconductor unit spun off from Rockwell Systems last year, said its first product in its so-called InfoSurge line of chips could allow manufacturers to build a $200 cable modem--far lower than the $300 to $400 price tag of current modems.

    Just as important, the company said the chip will allow software upgrades as new industry standards develop.

    Manufacturers should take to the chip, as the industry transitions itself from one where cable operators lease cable modems to one where customers may buy the technology outright. Lower hardware prices are essential to attract consumer interest, and cable operators need modems based on revised standards, expected later this year. The standards will allow cable operators to offer new revenue-generating services, such as Internet telephony.

    Conexant said the chip will be offered in sample quantities to all its customers in May, with volume production slated for the third calendar quarter of 1999.

    News of the new chip boosted the company's stock price to 17.625 in afternoon trading. Meanwhile, Broadcom dropped as much as 4 percent early before bouncing back to post a small gain at 60.625.

    Conexant's chip is also the first among several products in the market for broadband access, data delivery, and video display technologies, placing the company directly in competition with Broadcom, a large supplier of communications chips to General Instrument and Scientific Atlanta.

    "They [Conexant] got steamrolled by Broadcom in 1997, now they are back with a vengeance," said Michael Harris, president of Kinetic Strategies research firm.

    If the chip performs as advertised and gets delivered on time, Conexant has a good chance to steal market share from Broadcom, he said, as manufacturers are searching for a second source for modem chips.

    The company has also broadened its product lineup to include chips for the growing digital cable set-top box market, as well as chips that combine modem functionality with home networking capabilities. Conexant is able to combine a variety of formerly discrete functions onto a single chip, it said, because of its advanced manufacturing process.

    "Once we are down to this level of integration, you have a complete modem on a chip," said Jay Kshavri, director of modem products for the company. "For us that's the beginning in the broadband space." Kshavri said the company is considering such broadband features like Internet telephony, home networking, as well as integrating a 900-MHz wireless phone base into a cable modem.

    Upcoming products include an MPEG processing engine that integrates a number of functions into one of the most powerful and expensive components in digital cable set-top boxes, executives said. The company is also looking to produce a "tuner-on-a-chip," similar to the chip announced earlier this year by startup Microtune that replaces the cumbersome and costly set of components used to tune TV signals.

    No timeframe for the release of such products was given.