MPU innovations cure the blues

MPU innovations cure the blues
The slowdown in microprocessor sales that began late last year did little to dampen the torrid rate of innovation that characterizes the microprocessor market. Suppliers typically regard new technology as a cure-all for sluggish market growth, and they're hoping that this medicine will once again work its wonders in the second half of the year. In the coming months, both Intel and AMD will launch a steady stream of faster, better and cheaper processors for use in desktop and mobile systems. At the high end of the market, IBM and Sun Microsystems plan enhanced 64-bit lines that can better resist the anticipated onslaught of Itanium-based systems, while Hewlett-Packard and Compaq Computer develop new versions of their 64-bit chips to smooth their own product-line transitions to IA-64. As they launch their new processors, vendors must adapt to new, smaller process geometries and, in some cases, to new, bigger wafers as well.

During the past 12 months, the market for processors used in desktop personal computers has experienced a new phenomenon-brutal competition between Intel and AMD at the high end. The two rivals leapfrogged one another in 2000 with regard to clock frequency, but Intel pulled ahead in the gigahertz ratings with the launch of its Pentium 4 line. It appears that Intel will retain its lead, at least until AMD launches its Hammer series in the second half of 2002. In the near term, AMD plans to counter Intel's Pentium 4 thrust with this summer's launch of its new Palomino core, which likely will enter the market as the Athlon 4. Although AMD cannot match Intel's raw clock speed, its new processor's performance on real-world programs and benchmarks will allow the company to continue its battle for share in this segment.

Despite the rapid improvements in price/performance that this vigorous competition has produced, the desktop PC market continues to languish; many buyers appear to have concluded that systems purchased two or three years ago still run fast enough to handle today's workloads. System suppliers and semiconductor manufacturers now hope this fall's launch of Microsoft's Windows XP will help the industry shake off this lethargy and spark renewed growth.

Competition has also blossomed in the market for processors used in mobile PCs. Until early this year, Intel faced little effective competition in this segment, but the springtime launch of the AMD Mobile Athlon 4 and Mobile Duron gave system suppliers new alternatives for their mainstream and value notebook lines. AMD's desktop processors consume far more power than comparable Intel models, but AMD succeeded in curbing the appetite for power in its mobile processors, enabling it to deliver competitive battery life. Even with their PowerNow technology enhancements, these new AMD chips are poorly suited for the ultralow-power environments of mini- and subnotebook configurations. Though AMD has yet to enter this segment, Intel faces competition from Transmeta for these low-power configurations. That company has been especially successful in Japan, where NEC, Sony, Sharp, Fujitsu, Toshiba and Hitachi have incorporated its Crusoe processor into systems that target this segment. Intel plans to use one product, its new Tualatin processor (officially dubbed Mobile Pentium III M), to fend off the competition from both AMD and Transmeta. By moving its 0.18-micron Pentium III design to a new 0.13-micron process, Intel expects to reduce the MPU power requirements for its lowest-power configurations to under half a watt, matching Transmeta's efficiency. In other configurations, where battery life is less critical, Intel gains the ability to runs its fastest models at speeds up to 1.2 GHz, exceeding AMD's fastest posted speed to date for its mobile processors.

Given the malaise that has swept over the PC market, many suppliers look to sales in the server market to spur new growth. Unlike the desktop segment, where processor performance has outstripped mainstream application requirements, most server environments can effectively utilize all the performance of today's fastest processors, and still want for more. Intel has captured the lion's share of the server market, as measured by unit shipments. IDC, a market research firm in Framingham, Mass., estimates that Intel provided the processors for 84 percent of all servers shipped in the fourth quarter of 2000. But Intel's share drops off rapidly as system size and price increase, and its chips are found in less than a third of the high-end servers used to store enterprise-class databases. These "big iron" systems, marketed principally by IBM, Sun Microsystems, HP and Compaq, have remained the exclusive preserve of proprietary processors developed by those companies for use in their high-end systems. Intel's recently introduced (after a nearly interminable series of delays) Itanium processor includes those heretofore-missing features and will eventually alter the competitive dynamics of the high-end server market. Both HP and Compaq plan multiyear, orderly transitions to this new architecture, and each intends to complete the development of faster versions of its proprietary chips in the course of the migration.

Moore's Law continues to drive improvements in microprocessor performance. During the next twelve months, suppliers of desktop and mobile processors will complete their transitions to 0.13-micron production processes. The lengthier design cycle for high-end, 64-bit processors implies those devices won't begin the migration to 0.13-micron technology before 2003. Suppliers must upgrade their fabs to produce those 0.13-micron devices in order to maintain competitive levels of performance.

Although Intel is not alone in having more capacity than it needs for currently depressed market conditions, it has steadfastly pursued its plan to invest $7.5 billion in new plant and equipment, in anticipation of a resumption of market growth in years to come. Most suppliers continue to manufacture their devices on 200-mm wafers, but Intel's plans include a move to 300-mm wafer fabrication early in 2002.

Nathan Brookwood is President and Principal Analyst at Market Research Firm Insight 64 (Saratoga, Calif.).

• Transistor count tracks feature size and speed

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