Chips & Technologies Jumps Into Intel Territory : Computers: The company becomes the second to offer chips that are compatible with the industry leader’s 386 series.


In an effort to further loosen Intel’s stranglehold on the personal computer chip market, Chips & Technologies today will roll out a series of products designed to form the brains inside IBM-compatible PCs.

The announcement will make C&T; the second vendor, after Advanced Micro Devices, to offer chips that are compatible with Intel’s highly successful 386 series of microprocessors, or computers on a chip. C&T; will also unveil a novel “PC on a chip” that packs all the functions of a simple, early-generation personal computer onto one chip.

The development of full-fledged competition in the once-monolithic 386 market means that computer buyers will soon have to choose what kind of chip they want inside their machines. Intel is responding to the challenge from AMD and C&T; by trying to create a brand preference among consumers with a new “Intel Inside” marketing campaign.

The new products are vital for Chips & Technologies, a San Jose-based firm that has traditionally provided computer vendors with all the chips and circuitry needed for a PC except the microprocessor itself. But intense competition has led to losses at the once-high-flying company.


C&T; will be selling two types of 386-compatible chips. One, which can simply be plugged into a slot designed for an Intel chip, offers 10% better performance. Another requires a redesign of PC circuits but offers a 40% performance boost.

All the products also offer a design feature that allows PC makers to integrate special features--such as power conservation--into the chip. Volume shipments will begin in the first quarter of next year.

C&T; Chief Executive Gordon Campbell emphasized that the products were not copies of Intel’s chips but were developed from scratch by C&T; based on publicly available performance specifications for the 386. Thus they did not infringe on Intel patents or copyrights, he said.

“We went out of our way to do everything the correct way--we have nothing to hide,” said Campbell. “I even went to Intel to explain what we were doing and how we did it. We have no desire to go to war with Intel.”


Until AMD introduced a series of 386 “clones” earlier this year, Intel had enjoyed a monopoly on the 386 market, which now posts sales of about $1.5 billion annually. AMD and Intel are locked in a bitter, multifront legal war over rights to the 386 technology, but AMD has persuaded some PC makers--including AST Research--to use its chips in some of their products.

Michael Slater, editor of Microprocessor Report, says of the new C&T; 386 chips: “Assuming their claims about compatibility and performance are true, they are technically very good products. If it were not for legal and marketing hurdles, they would certainly be very successful.”

Intel is responding to the challenge in the 386 market by trying to move customers to the higher-performance 486 and by stepping up its efforts to develop brand loyalty among computer buyers. Intel runs its own advertising touting its chips and also gives PC vendors incentives to include the “Intel Inside” logo in their PC advertising.

Traditionally, personal computer buyers have had to worry only about which version of the Intel processor was in a PC, not about the brand. But with the C&T; products and other 386 chips that are expected to be announced later this year, customers will have a more complex choice among different brands boasting different performance features and--perhaps--different levels of quality and compatibility as well.


C&T; today will also introduce the PC Chip, which is based on an early generation of PC microprocessors--the 8086--but includes many functions that used to require separate chips. That will allow the development of “palmtop” PCs costing only a few hundred dollars and will also allow PC technology to be integrated easily into other electronic systems.