Intel to Create $300-Million Development Fund

Intel Corp., the No. 1 maker of computer chips, is expected to unveil a fund of about $300 million to encourage development of hardware and software for its new processors, analysts said. The fund would give money to firms that develop products to work with Intel’s Merced and McKinley processors. Merced, which has been delayed several times and is now scheduled for release in mid-2000, will be faster and more powerful than today’s chips. Intel is moving to introduce its speedy IA-64 family of computer processors as it looks to ease its reliance on the personal computer market, where sales growth has slowed. Merced and McKinley will be used in sophisticated servers and mainframe computers that need more power than Intel’s flagship Pentium processors offer. “This is the most significant move since 1985, and there is a lot involved to get the ball rolling on it, so it makes sense for Intel to do seed development,” said analyst Gregory Mischou of Warburg Dillon Read, who rates Intel’s stock “buy.” Santa Clara, Calif.-based Intel declined to comment. Intel shares rose $1.25 to close at $60.94 on Nasdaq.