Intel developing new integrated chip

Positioning itself for the post-PC era, chip giant shifts focus to tech appliances, Intel Exchange Architecture and a new chip called 'Timna'.

Intel, despite early indications to the contrary, expects 1999 to be the best year for the PC business since the mid-1990s. But the company is shifting its focus away from PCs and PC chips -- and developing a new integrated processor code-named "Timna."

Intel told analysts Thursday during a Webcast that it weathered the stormy PC market in 1999 -- escaping, for example, the Taiwan earthquake relatively unscathed.

At the same time, revised PC sales growth projections, given in September, show higher PC unit growth than previously expected. Intel's Webcast took the place of its biannual analyst meeting. "The update is showing that we're growing faster this year than at any time since the multimedia boom (in 1995 and 1996). We see an Internet boom driving demand for clients and servers. We don't see that our demand is gated by supply issues," said Sean Maloney, Intel's senior vice president of sales and marketing.

At the same time, he said, "we see little to no Y2K impact on our business. We also see no significant impact from the Taiwan quake." Despite the rosy outlook and plenty of fast new chips in the pipeline, Intel will be looking beyond the PC in 2000.

The company is developing processor technologies markets, ranging from low-cost, integrated PCs and set-top boxes to its Intel Exchange Architecture for communications devices. Intel is also betting heavily on its brand-new services arm, which will provide hosting services to businesses and will continue its emphasis on investing in other companies with funds such as its IA-64 fund for assisting in the development of software for its forthcoming 64-bit Itanium chip.

For the first time, Intel on Thursday acknowledged the existence of a new integrated processor, code-named "Timna." "Timna is essentially our first PC on a chip," said Paul Otellini, Intel's executive vice president and general manager of the Intel Architecture Business Group.

A Timna processor integrates a CPU core with graphics and memory controllers, allowing for it to be used in very low-cost PCs and likely in appliance-like devices as well. The company intends to see growth in communications and networking as well as applied computing (otherwise known as the embedded market) and flash memory, said Craig Barrett, Intel's president and CEO.

"We have a strong manufacturing and technology position (in flash)," he said. "We expect this business to grow very rapidly." Flash memory, which stores data in memory chips, is used in a range of devices. It has taken off of late, due to its use in cellular phones.

While Intel has been producing flash memory for some time, it also intends to grow into new markets. Intel recently announced IXA, or Intel Exchange Architecture, which it says will provide building blocks to develop network products, including devices such as routers or dedicated server appliance devices for secure socket layer acceleration or load balancing. Intel will continue to make acquisitions to help build its product line here, Barrett said. Its investment strategy will continue to grow as well, with added emphasis on international companies.