Chips & Technologies May Challenge Intel : * Computers: Analysts say the company will unveil a microprocessor that will directly compete with the industry leader.

From Associated Press

Chips & Technologies Inc. is about to give Intel Corp. some direct microprocessor competition, further breaking Intel's near monopoly position for the key computer technology, analysts said Wednesday.

Chips is expected to introduce a rival Intel-compatible microprocessor at a news conference on Sept. 30, although the San Jose-based company isn't releasing any details or confirming the announcement.

But most of the industry has heard about the event, which comes five months after Advanced Micro Devices Inc. introduced its clone version of Intel's popular 386 microprocessor "brains" of most personal computers. That introduction broke Intel's five-year de facto monopoly on microprocessors.

"The rumors have been going around for almost two years, but it's no great secret that Chips & Technologies is finally ready to introduce it," said Michael Slater, editor and publisher of the Microprocessor Report in Sebastopol, Calif. "In fact, some other smaller companies are rumored to be working on their own Intel-compatible microprocessor designs too."

Cyrix Corp. of Dallas and Nexgen Microsystems Inc. in San Jose are two companies that analysts say might introduce Intel-like microprocessors during the next year.

Tom Thornhill, a senior semiconductor analyst with Montgomery Securities Inc. in San Francisco, said Intel won't likely lose too much market share, however. Intel has a tight grip on the industry already because of its customer base and leading technology, he explained. And, he said, the Santa Clara-based Intel continues to improve its X86 line of microprocessors.

"Assuming these other microprocessor companies clear the legal and compatibility hurdles, there is a lot of room in the market for them," Thornhill said. "But I don't believe their impact is going to be large on Intel.

"I don't think anybody should underestimate Intel's ability to add features to compete. They're definitely a moving target."

Successful Intel rivals will likely have to offer unique performance capabilities to compete well, both Thornhill and Slater said.

AMD and Intel have ended up in court over the cloning issue, with AMD claiming its 1980s technology-sharing pact with Intel gives the company the right to mimic the popular "brains" of most PCs.

But the Chips product apparently isn't a clone of Intel's 386 microprocessor, according to analysts who said there's still a chance that Intel could wage a legal battle if the design is too close.

Chips & Technologies, which makes computer chip sets that direct the work of microprocessors, needs to expand because the chip sets are becoming less needed as the computer brains grow in power, analysts say.

Microprocessors also have a larger profit margin, as much as 50%, compared to as little as 5% in the very competitive chip set market, according to Slater. He said 15 million to 20 million microprocessors were shipped last year.

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