October 15, 1997

Amid Mixed Profit Reports,
Intel Talks of Its Fastest Chip

By JOHN MARKOFF

AN JOSE, Calif. -- Top chip designers from Intel and Hewlett-Packard gave the first public briefing Tuesday on the ultrafast microprocessor chip that the companies hope can dominate computing in the next decade the way Intel chips have held sway in the 1980s and '90s.

And as if to underscore the need to move to higher techological ground, Intel Corp. reported third-quarter earnings Tuesday that were below Wall Street expectations. The disappointing results came in part because of price pressure from competitors to the company's current Pentium line of microprocessor chips for personal computers.

After the stock market closed, Intel reported a profit of 88 cents a share, compared with a forecast of 91 cents by analysts surveyed by First Call. Intel's shares, which had closed at $91.875 in regular Nasdaq trading, plunged to $86.50 in early after-hours transactions.

“It's what you would expect if you sent a team of designers off to study the leading edge in computer science.”
Dennis Allison, computer designer

Shares of another chip maker, Texas Instruments, dipped $5.4375, to close at $135.5625 in the regular trading session, even though the company's earnings report exceeded analysts' forecasts. Apparently, some investors had hoped for even better results, while others took profits from a recent run-up in Texas Instruments' stock price.

Intel, looking to expand beyond the PC market, has teamed up with Hewlett-Packard Co. to develop a chip architecture known as IA-64, that would be used first by machines capable of handling complex corporate and engineering computer tasks. They are expected to be at least three times as fast as any Intel chip now for sale.

The first IA-64 chip, code-named Merced, is expected to reach the market in 1999. It would leapfrog Intel's current best chips by processing information 64 bits at a time, rather than 32 now. It would also be capable of handling many more tasks simultaneously -- a technique known as parallel processing.

"This is a clean machine," said Dennis Allison, a veteran Silicon Valley computer designer who was in an audience of more than 800 leading computer and chip architects gathered for the annual Microprocessor Forum here. "It's what you would expect if you sent a team of designers off to study the leading edge in computer science."

The presentation was made by the designers John Crawford of Intel and Jerry Huck of Hewlett-Packard.

Related Article Intel and Hewlett-Packard Gamble With Faster Chips (August 27, 1997)

Crawford, Intel's lead computer architect, described the new design as "explicitly parallel" computing. He said this approach avoided a complex problem found in some previous forms of parallel computing, which required the chip to sort through vast streams of interrelated instructions to decide which to execute first.

The new approach is crucial, Crawford said, because it will allow future chip designers to increase the number of simultaneous instructions without creating chaos and complexity.

Intel's profit report Tuesday reflected the increasing need for the company to defend its dominant share of the PC chip market from imitators like Advanced Micro Devices and the Cyrix Corp.

Merced may be faster than 900 megahertz.

Net income rose to $1.57 billion, or 88 cents a share, from $1.31 billion, or 74 cents a share, in the quarter a year earlier. Revenue climbed nearly 20 percent to $6.16 billion from $5.14 billion. But profit was below what many analysts had expected.

"Intel's revenues are slowing because they have slashed prices," said Michael Slater, publisher of the Microprocessor Report, the industry newsletter that sponsored Tuesday's conference. But, he predicted, "growth will be very good next year."

Crawford, the Intel designer, was looking further into the future, however -- to 1999 when the Merced arrives. Analysts had been predicting that the speed of the new chip might exceed 900 megahertz when it is introduced -- more than three times faster than today's fastest desktop PC microprocessors. However, because of its increasing use of parallel computing techniques, it now seems likely that the new Merced chip may perform even faster.

Yet Intel is taking care to describe the IA-64 (IA stands for Intel Architecture) as a design not for desktop PCs but for commercial work stations and even mainframe applications.

Computer designers at Tuesday's event said that because the chip would require new manufacturing techniques capable of etching circuitry as fine as 0.18 microns, or millionths of a meter, it may be 10 years before the IA-64 technology will be used throughout the Intel product line and replace the current so-called X86 series of PC chips that includes the Pentium.

And making the future chips compatible with current PC chips will not be easy, some experts said. Such compatibility would be necessary so that the future machines can run today's software.

"It's a good design, but it will be more difficult to run the old computer instructions than Intel currently believes," said David Ditzel, president of Transmeta Corp., a computer design firm in Santa Clara, Calif. He said that if the new IA-64 chips runs today's software more slowly than the fastest Pentium chips, it would likely push back the transition to the new chip design.

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