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Intel Puts TV Chip on Hold Due to Delivery Delays

Posted on: Tuesday, 24 August 2004, 06:00 CDT

Aug. 22--Beset by delays in the delivery of its next-generation computer chip, Intel has responded by holding back on its planned foray into a new market: chips for projection television sets.

The US microchip maker has long been the champion manufacturer of chips for home computers and business servers.

But it has been losing ground to Advanced Micro Devices. Even Craig Barrett, the chief executive who steps down next spring, agrees. He recently e-mailed employees: "This is not the Intel we all know."

Intel's troubles are rooted in its success. As the leader in ever-faster microchips, Intel invested heavily in extending its popularity. It bet that computer makers and consumers would continue demanding speed.

But the chips planned half a decade ago are not necessarily suited to the needs of today's multimedia home computers and corporate desktops.

Intel has overworked its engineers to design new chips that support better sound and video and use less power.

The working model of its Pentium 4 creates too much heat and PC makers say they can't install them.

Hewlett-Packard, Dell and other computer makers slowed down buying the older chips to wait for promised new ones. But Intel, known for clockwork schedules, has been unable to deliver.

Every two years Intel made good on a promise to double the speed of its processors. But over the past year, the changing technology of chips has saddled the firm with delays.

On 29 July it announced that its new 4-gigahertz Pentium chip, expected by November, won't be out until January 2005.

Paul Otellini, the president who takes over from Barrett, has cancelled upgrades of the Pentium 4 and has ordered engineers to make a cooler-running PC chip, but it won't be ready until the end of next year.

Intel's shares were mired around $22 on Friday.

Advanced Micro Devices is catching up. Over the past six months, it has garnered about 50 percent of chip sales for desktop computers and is taking on Intel in server chips as well.

Intel's decision to work on a cooler-powered chip design was followed by the delay in the projection TV chip. They were supposed to be delivered by the end of the year. Texas Instruments dominates the market with a technology employing tiny, mobile mirrors.

Intel wants to roll out a technique named liquid-crystal on silicon that could reduce costs. It can handle 2m pixels on a TV screen, as opposed to Texas's chip, which can produce only 1m. Sony has a two-mega pixel technology in its TVs, but they cost around $25,000 each.

Intel hopes its chips can allow TVs to sell at less than $2,000. That hope is on hold.

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