February 6, 2008 4:00 AM PST

Silent start-up readies to take on Intel in notebooks

It's a drama we've all seen play out before: a small, secretive start-up lays plans to come out with a chip that will compete against Intel in a hot market.

Montalvo Systems is just hoping it has a different ending this time.

The Santa Clara, Calif.-based company is designing a multicore, energy-efficient chip for ultraportables and notebooks that will be capable of running the same software that Intel chips run, according to sources. Venture and private equity firms such as CMEA, Bay Partners, U.S. Venture Partners, NEA-IndoUS Ventures, and Adams Street Partners have plunked more than $73 million into the company.

The company has filed several patents, say sources, but only a few applications have thus far become public through the World Intellectual Property Organization. The disclosed patent applications revolve around conserving energy while retrieving data from memory or caches.

Although the company doesn't have chips yet, it is expected to make some sort of public announcement later this year about its progress. It has offices in Silicon Valley and Bangalore and has several employment requests open on job boards.

A company representative declined to comment for this report.

Many of the people behind Montalvo have tangled with Intel before. NEA-IndoUS's Vinod Dham, who sits on Montalvo's board, was one of Intel's chief chip architects during the Pentium era. He then went to NexGen, which designed an Intel-compatible chip, and Advanced Micro Devices, which bought NexGen.

Montalvo's CEO is Matt Perry, who also served as chief executive of Transmeta, which once tried to take on Intel in notebooks but now largely concentrates on technology licensing. Peter Song, Montalvo's chief architect, earlier founded a company called MemoryLogix, which tried to build low-power Intel-compatible chips. Other current and former employees include Greg Favor (formerly of NexGen and AMD) and Mike Yamamura. (CNET blogger Peter Glaskowsky is chief systems architect for Montalvo and is listed as a co-inventor on two published Montalvo patent applications, but he was not involved in any way in this story. CNET is the publisher of News.com.)

Montalvo is also talking with an established chipmaker to manufacture the chip. The number of chipmakers with legal permission to produce Intel-compatible chips is relatively small and many, such as IBM, have lost money on helping out start-ups in this market. Fujitsu, which makes Intel-compatible Transmeta chips, is one likely candidate.

Being compatible with Windows and the thousands of applications written for PCs gives the chip a vast potential market. Historically, Intel also has had difficulty in reducing the power consumption of its chips because of their underlying architecture.

Competing against Intel, however, is never easy. The company remains the largest and one of the most efficient chipmakers in the world. Even in 2005 at the nadir of its recent market share war with rival AMD, Intel stayed above 70 percent market share and remained profitable.

Since then, Intel has only become stronger. The company has drastically improved the power efficiency of its chips. This week, in fact, it detailed an upcoming low-power chip for smartphones and small notebooks called Silverthorne that will run at 2GHz and consume 2 watts of power.

To top it off, phone and PC makers are generally reluctant to buy chips from the competitors. The process can take years. AMD spent decades cranking out Intel-compatible microprocessors before PC makers began in 2003 to consistently incorporate AMD chips into their lineups. Before that, PC makers would adopt one or two AMD chips, and then drop them after AMD delays or Intel price cuts. When acquisitions are taken into account, AMD has lost more money than it has made in over three decades of being in the chip business.

That's the high point. The rest of the companies lived tales of woe. Transmeta landed a couple of small deals with Sony and Sharp early on. It then hit manufacturing problems and entered a financial tailspin from which it never completely recovered. Cyrix teamed with IBM, National and later Via, but only landed a few token design wins with PC makers. (When IBM manufactured chips on behalf of Cyrix, it had the right to keep and sell chips coming off its assembly lines, but IBM only put these chips in a few computers in a few national markets.)

Others like Rise Semiconductor and IDT gave up at even earlier stages.

So why would a company even try? That's the $73 million plus mystery. Although Intel has done well in notebooks, AMD has lagged behind its main competitor technologically, so a company could get into the market by trying to scoop up share against AMD. Developing a patent portfolio can also pay off. Transmeta settled its suit with Intel for $250 million last October. MicroUnity, a company that went from Hot to Not in the early '90s, settled a suit with Intel for $300 million in 2005.

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5 comments

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Transmeta
The only word this article actually had to use. It used it, but it used a lot of other, unnecessary words as well.



Disclaimer: This is a joke, if you can't tell.
Posted by drhamad (117 comments )
Reply Link Flag
True...
Yes, it was obviously a joke. But there's a surprising amount of truth in it.

If they come out with something that is on parity with the performance or power consumption of Intel's offering, they are dead before they even start. They would have to have something that is truly revolutionary, in both power and performance, or there is not a systems designer in the world that is going to pay them any attention whatsoever. "Transmeta". Nobody wants to get burned twice.
Posted by DivingDancer (17 comments )
Link Flag
ateMsnarT
T r a n s M e t a
Posted by Drpixelphd2 (172 comments )
Link Flag
Just for the record...
Yes, this story was a surprise to me. I even saw Michael at ISSCC
on Monday but he didn't breathe a word about it. Sneaky fellow!

Remember, there isn't a word about what Montalvo is doing on
my CNET blog: <a class="jive-link-external" href="http://speedsnfeeds.com" target="_newWindow">http://speedsnfeeds.com</a>

:-)

. png
Posted by Peter N. Glaskowsky (606 comments )
Reply Link Flag
I could not agree more
If it came out today it would have to be some cheap, .32nm CPU that used half the power and performed just as well before any major vendor like Dell or HP to consider putting it in their systems.

I smell a mixture of hype/failure. Or they will end up making CPU's for talking stuffed animals in the end.
Posted by Maclover1 (440 comments )
Reply Link Flag
 

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