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New Pentium 4 to alter competitive map

The design of the Northwood chip, to be introduced Monday, lets Intel dramatically shrink processor size, meaning lower costs--or higher profits--per chip.

New versions of Intel's Pentium 4 due out next week are expected to stifle criticism that the chip is more expensive and offers less-enthralling performance than its nearest competitor.

On Monday, Intel will introduce two new versions of the Pentium 4--code-named Northwood--that will run at 2.2GHz and 2.0GHz. But more important than the speed bump are the design of the chips and the way they are manufactured, developments that are expected to help the company open a competitive gap between itself and cross-freeway rival Advanced Micro Devices.

PCs featuring the chip, along with a chipset for hooking Intel PCs into fast double data rate memory, will arrive the same day from Gateway, Dell Computer and others, according to sources.

The Northwood Pentium 4 chips differ from the current versions of the chip in that they are made on the 130-nanometer (0.13-micron) manufacturing process, rather than on the 180-nanometer process by which existing Pentium 4s are made. The 130-nanometer designation refers to the average size of the features on the chip.

The new process allows Santa Clara, Calif.-based Intel to dramatically shrink the size of the chip, which in turn allows it to lower the cost or raise its profits per chip. The current Pentium 4 measures 214 square millimeters and initially cost Intel about $100 to manufacture, estimated Kevin Krewell, an analyst at the Microprocessor Report.

By contrast, Northwood chips will measure approximately 145 square millimeters and cost about $55 initially to make, Krewell said. Other estimates peg Northwood to measure around 116 square millimeters.

At the same time, performance will improve because Northwood chips will offer--along with the higher clock speeds--a larger secondary cache, a reservoir of memory located on the same piece of silicon as the processor for rapid data access. Northwood chips will contain 512KB of cache, while current Pentium 4s contain 256KB.

"Because of the increase in cache and the boost in clock frequency, Intel will start to pull away from AMD," he said. "Even with the larger cache, (the chip) is going to be smaller."

Performance has long been a sticking point for the Pentium 4. Although it is the fastest chip on the market today, as measured by gigahertz, analysts and benchmark testers have criticized its overall performance. A 2GHz Pentium 4, for instance, provides less oomph than the Athlon XP 1800+, which runs at 1.5GHz on many benchmarks, according to testers. Gigahertz refers to the number of cycles per second--2 billion in the case of the current Pentium 4.

The disparity exists because the Pentium 4 performs less work per clock cycle than the Athlon.

The lower manufacturing cost will also let Intel continue to wage a price war against AMD. The 2.2GHz Northwood will come out at $562, the typical entry point for Pentium 4s. Prices on other Pentium 4s will be cut during January. The price war has been great for customers, but it has drastically cut Intel's profits and sent AMD into the red.

Pricing "is not going to get any better," Krewell said.

Sunnyvale, Calif.-based AMD, of course, won't be standing still. It will kick off 2002 with a 2000+ Athlon XP in January. In the first quarter, it will also come out with "Thoroughbred," a version of its Athlon XP chip made on the 130-nanometer process. The chip will cover 80 square millimeters in area.

"We believe we have a 10 percent to 20 percent advantage on cost" because of smaller chip sizes, Hector Ruiz, president of AMD, said in November.

The Northwood chips will also be the first Pentium 4 chips to be made with copper wires, rather than aluminum ones. Copper conducts electricity better than aluminum and thus gives designers an avenue to break through looming physical barriers that could prevent further boosts in chip performance.

Intel introduced its first copper processors, Pentium III-M chips for notebooks, in the middle of last year. A copper 1.2GHz Celeron, based on the Pentium III architecture, came out in October. AMD and IBM already sell desktop processors with copper.

Although it may seem odd to release new chips and PCs right after the rush of the holiday buying season, it is a common strategy in the processor business. In 1996, Intel decided to postpone the release of the first Pentium MMX chips from late that year to early 1997. Press coverage of the MMX had been rather extensive, and executives and analysts later blamed the relatively slow buying of 1996 to a desire on the part of consumers to wait until January to buy PCs with the new chips.

Since then, Intel has tackled the problem by putting out the last major chip releases for a given year in September or October and then refreshing in January. In the first week of 1999, Intel ushered in a raft of Celeron processors, along with a prolonged price war. The Pentium 4 itself was supposed to debut in October 2000, but got pushed back to November because of a minor glitch.