VIA processor steals march

Taiwanese chip-design house VIA Technologies has made advances in its bid to take a stronger position in the microchip market.

Taiwanese chip-design house VIA Technologies has made advances in its bid to take a stronger position in the microchip market.

It has linked with the world's largest made-to-order foundry, Taiwan Semiconductor Manufacturing Corp (TSMC), to produce its latest Cyrix processors at 0.13 of a micron.

In the past week, the company has announced three leading customers - NEC, Sony and Micron - had decided to place orders for its Savage Mobile Graphics package which it is producing through its joint venture with specialist developer S3 Graphics.

Producing top-level chips is one thing, but for VIA to produce the Cyrix processor at the leading-edge 0.13-micron level is ground-breaking.

The battle for smaller chips has been raging for decades, with makers having managed to get chips down to the 0.18 of a micron level.

One micron, 1000th of a millimetre, describes the size of the inter-connections between transistors within a chip.

Not only does a smaller size mean smaller chips, or more powerful chips for the same area, but it means less power consumption and less heat, both of which are significant at the portable-computing level.

The company says its new Cyrix processors are ideal for the notebook and Internet appliance markets. Of great significance to VIA, and TSMC, is in being the first to produce a 0.13 of a micron processor - putting pressure on market leader Intel.

The news, however, did not come as a big surprise to analysts since it was known TSMC was working on 0.13 micron technology and that VIA was working hard on its Cyrix series.

VIA Technologies bought Cyrix from United States-based National Semiconductor last year as part of its move into the processor market.

"It was not a big surprise," said Elise Tung, semiconductor analyst at Taiwan International Securities. "The technology itself is not that hi-tech, but there is an issue of how to allocate resources."

It is believed the first chip off the production line at TSMC will be the Cyrix Samuel II, which will run about 850Mhz. That compares favourably with Intel's Celeron, which runs about 766Mhz.

For VIA, a chip-set specialist, the move forwards on the CPU front opens up wider opportunities.

"But now it is a little different because they are the leader," she said. "If they push all the right buttons, maybe they can beat Intel." "Why not?" Ms Tung asked. "They have the money, they just need the engineers," she said, pointing out that Taiwan's integrated circuit (IC) design houses lacked good engineers. She sees positive signs on the horizon with foreign-educated Taiwanese returning home.

VIA's fate also lies in its foundry process. As with any new chip-production process, it needs TSMC to achieve a good percentage of chips that can be used at the new 0.13 micron level for production to be viable.

In a similar way to baking a batch of cookies, a new chip recipe can take many batches before the problems are sorted out.

VIA has indicated that it has received some 0.13-micron wafers and verified their functionality.

If those problems can be worked out, then the chip should be smaller, faster and cheaper than Intel's Celeron and could pave the way for faster chips to be made, possibly into the plus 1GHz range.

Intel last month released its long-awaited Pentium 4 which can run as fast as 1.5GHz, but many in the industry say it is considerably larger than earlier Pentiums.

While VIA's moves into the processor market are seen as being more sexy, its success in other chips is also of significance.

Last week the company announced Sony, NEC and Micron were choosing S3 Graphics' Mobile Savage for their notebook products, boosting VIA's bottom line and garnering it more kudos in the microchip industry.

VIA's mid-year acquisition of S3 Graphics from S3 was watered down to a joint-venture, supposedly in response to concerns from Taiwan authorities. The latest announcements are seen by analysts as a sign that things are looking up for VIA.

According to local news reports, the company has already admitted that its fourth quarter figures would disappoint, however strong results earlier in the year may give it a respectable revenue figure at year end.

"I still feel optimistic about IC design factories," said Ms Tung, who tips VIA Technologies to out-perform the market in the longer term.

She is, however, wary that the problems in the semiconductor and motherboard markets will put pressure on VIA.

"VIA definitely will get hurt. But at least it is in a good position," she said.