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Intel Today to Release New Chip for Servers

Posted on: Monday, 26 June 2006, 06:00 CDT

By Michelle Kessler

SAN FRANCISCO -- Intel today plans to launch a chip that's both technically impressive and ahead of schedule -- a sign that the semiconductor giant is righting itself, tech analysts say.

The processor chip, known in the industry as Woodcrest, is designed for back-office computer servers. Intel earlier said it would be ready during the second half of the year.

The good news is a welcome bright spot for the No.1 chipmaker, which has faltered in recent months. CEO Paul Otellini announced a restructuring plan in April, and some chip analysts see the Woodcrest launch as an early sign of progress.

"It really is a significant jump for Intel," says chip analyst Jim McGregor at researcher In-Stat.

Intel has dominated the industry for decades by churning out chips with ever-faster computing might, called "clock speed."

AMD took a different approach. It designed chips that could gobble data in bigger chunks than Intel, which can improve performance for some tasks. And it plunged into dual-core chips, which are fast because they have two processors or "brains" on a single chip.

The innovations were a hit. The chips were a hit. In the first quarter, AMD accounted for 22% of the Intel-style server chip market, In-Stat says. (Just four years earlier, AMD was a bit player, McGregor notes.) No.1 PC maker Dell even moved away from a long-standing Intel-only policy and began buying from AMD.

Intel scrambled to match its rival. It even beat AMD's dual-core chips to market by a few days. But unlike AMD, its products were cobbled together from a hodgepodge of older technologies, McGregor says.

Woodcrest changes that. It's based on a new design created specifically for low-power, dual-core chips. Early reviews have been positive. AMD's server chips "have been (Intel's) Achilles' heel," McGregor says. "This gets them back into the ballgame."

Intel plans a related line of desktop and laptop chips later this year. That's good timing, says chip analyst Tony Massimini at Semico Research. Chip sales are expected to rise 10% this year, the Semiconductor Industry Association says.

Analysts will be watching Intel closely during the next few months. Otellini is expected to release more details about his restructuring plan during the company's July 19 earnings report. Rumors are flying that Intel may sell its mobile-phone chip business or lay off thousands of workers. McGregor expects more modest reforms. "It's hard to say. They've been very quiet about things," Massimini notes.

Still, for all Intel's troubles, the company remains the industry leader, Massimini says. "AMD has tried for a long time to get their foot in the door. They at least got a toe," he says. But Intel remains a behemoth making processors for almost eight of every 10 computers sold. "They're still earning lots of money," he says.

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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