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Chip innovation: Underlying theme at Silicon Valley conference

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CIOL Bureau
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Duncan Martell

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SAN FRANCISCO: Amid the worst-ever slump in the semiconductor industry,

leading makers of microprocessors are expected to unveil striking new

power-saving technologies and increasingly robust microchips at a Silicon Valley

conference next week.

The unrelenting pace of innovation in the face of recession is expected to be

the underlying theme at this year's Microprocessor Forum next week in San Jose,

California, one of the industry's biggest trade shows.

Because microprocessors, the brains of a myriad electronic devices from PCs

to Palm handhelds to routers, take years, not months, to develop, new design

rollouts remain largely unaffected by the vagaries of the economy or spending by

corporations on information technology, industry analysts said.

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"The downturn in spending has a very limited, if any, impact on

development and innovation," said longtime chip analyst Nathan Brookwood of

Insight 64.

That's partly because engineers who have been laid off in Silicon Valley and

in high-tech hot spots around the world manage to find new jobs at start-ups, or

rivals to the companies that fired them, which, in turn spurs innovation.

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This, too, shall pass



On top of that, most expect the high-tech industry to snap back quickly once
overall economic growth strengthens.

"Some time in 2002 it'll probably pass and we'll be back to healthier

economic conditions where people will be buying products," Brookwood said.

Market researcher IC Insights now predicts that global semiconductor sales

will tumble 34 percent in 2001 from 2000, double the decline in the previous

worst-ever year for the chip industry, when sales declined 17 percent to $21.4

billion in 1985. Global chip sales in 2000 were $200.4 billion.

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Although high-tech has had a dismal year, engineers will be for the first

time disclosing more than 30 new microprocessors, network processors designed

for routers and switches, and digital signal processors, which are widely used

in cellular phones, according to market research firm In-Stat/MDR, which is

presenting the forum.

In-Stat/MDR is a unit of Cahners Business Information, which is owned by

Dutch publishing giant Reed Elsevier Plc .

Among those presenting new processors, most of which won't be commercially

available for a year or more after this year's conference, will be Advanced

Micro Devices , ARM Holdings Plc, International Business Machines Corp.'s

microelectronics group, Intel Corp., MIPS Technologies Inc. and Sun Microsystems

Inc.

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Intel, based in Santa Clara, California, will discuss details of its

forthcoming network processor based on its XScale technology that the company is

aiming at chips for cell phones and handhelds.

Intel engineers and executives will also take some of the wraps off its

upcoming Pentium 4 chip designed for laptop computers, as well as technical

details on its Banias mobile chip due out in 2003, its first processor ever

designed from the ground up for use in mobile computing devices.

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It's not just performance



More broadly, Intel will also discuss its efforts, and those of the industry, to
balance power and performance when designing new products.

"Performance is important, but we need to go beyond that," said

Wilf Pinfold, technical director at Intel's microprocessor research lab.

"What are the other factors associated with overall computing experience

that are important to PC and computing users across the board."

From processors that power handheld electronic organizers to those that run

so-called Big Iron mainframe-like computers, the industry is only getting more

varied, prompting organizers to expand the conference to three-and-a-half days.

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Upstart low-power chip designer Transmeta Corp. will be announcing a new,

smaller version of its Crusoe chip, analysts said. AMD, Intel's long-time and

scrappy rival, will talk about new Athlon processors for workstations and

servers, as well as discuss initial plans for its own 64-bit processors used in

heavy-duty computers run by universities, airlines, banks and the like.

Intel's Itanium chip, which cost billions to develop and was late to market,

is its firsts foray into the 64-bit market. The Itanium can crunch 64 bits of

data at one time, compared to 32 bits now crunched by its Pentium III and

Pentium 4 chips, as well as by AMD's Athlon and Duron chips.

"The overall microprocessor business has gotten so large now that it's

highly segmented," Brookwood said.

Highly segmented, yes, but at least for this year, somewhat slim on profits.

And that's why companies that can afford to, such as AMD and Intel, keep

innovating and investing. Intel is investing $11.5 billion this year on research

and development and capital spending.

"We have not pulled back on our efforts to innovate, and I think you'll

see that in some of the announcements that will be coming out," Pinfold

said. "We hope to see things turn around in the economy as soon as possible

and we'll be ready as soon as it does."

(C) Reuters Limited 2001.

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