September 16, 2003 2:34 PM PDT

Intel mulls chips for developing world

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SAN JOSE, Calif.--Intel is scrutinizing ways to come out with less-expensive versions of its processors and chipsets to better suit the customer base in India, Eastern Europe and other developing regions.

Intel is "very seriously" looking at preparing cheaper derivatives of its PC parts, Paul Otellini, the Santa Clara, Calif.-based company's president, said in an interview Tuesday during the Intel Developer Forum here. "It may not be for the next billion (PC users), but maybe the next billion people after that."

Ultimately, full-fledged PCs could sell for as little as $199, he said.

The developing world is the new frontier for high-tech companies. North Americans and Europeans are already swimming in PCs. Intel, among other companies, is seeing its strongest growth in China and similar regions. But most of these PCs are being sold to an urban middle class, not the people living in the rural hinterlands, said Bill Siu, vice president and general manager of the desktop platforms group at Intel.

Taiwan's Via Technologies sells most of its inexpensive processors in the developing market. Advanced Micro Devices, meanwhile, recently resurrected its budget Duron line for the Chinese market.

"So you don't sell it for $350," said Peter Glaskowsky, editor in chief of the Microprocessor Report, an industry newsletter.

Some manufacturers are currently selling $199 PCs, but often they lack features found in standard PCs. Generally, they also do not come with Windows, Siu said. "Software is a big piece of it," he said.

The main question facing the company now is how to take the cost out of building a desktop. Historically, semiconductor manufacturers have cut costs by combining two or three parts onto a single piece of silicon.

"Integration has traditionally been a strong ally," Siu said. Integrated components, however, take substantially longer to develop, so manufacturers run the danger of missing a window of opportunity or coming to market with a new processor that is slower than the competition.

Predicting technological trends in advance can also be difficult. In the late 1990s, Intel was developing an inexpensive processor code-named Timna. Timna contained a memory controller that allowed it to be used effectively only with memory based on designs from Rambus. When Rambus memory proved to be expensive and unpopular, Timna was killed.

"We placed a bet on the wrong memory," Otellini said.

 

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