This week brought the latest piece of evidence that Intel , despite ruling the PC microprocessor race, cannot be all things to all parts of the chip business. The company is closing its custom chip manufacturing division, which for the last 18 months has produced application specific integrated circuits (ASICs) -- specially designed circuits used in networking equipment and other non-PC computing devices. IBM, Intel's archrival in the chip business, is the leader in this area, reaping about US$2.7 billion in revenue last year.
Intel's move is not, in itself, remarkable. The company has often retreated from businesses it found no longer could support margins or strategic directions. The most notable example was the company's cession of the dynamic random access memory market to Asian chip giants in the '80s, as it switched to focusing almost exclusively on CPUs.
Now, however, amid renewed competition from rivals AMD and Transmeta, sluggish sales of PCs and skyrocketing Pentium speeds for which no mortal can find a use, it is tempting to view any retreat as a capitulation. With the tech world focused on buying less costly gear, is the world's foremost chipmaker in the twilight of its reign? Intel has not stopped perfecting its products, but the business case for the company's microprocessors is harder to muster than it once was.
Newsfactor
Apr 21, 2003, 03:26 PM
