SAN JOSE, Calif. Having pinned themselves to Intel Corp.'s coattails in search of more-profitable markets, some semiconductor suppliers are beginning to wonder if they should have come along for the ride.
Intel's announcement this week that volume availability of its Camino chip set will be delayed until late in the third quarter has sparked widespread frustration among companies with new products tied to the chip set's rollout. While it will likely have little effect on this year's consumer-PC market, component makers are decidedly anxious over the slip.
"It's our worst-case scenario," said Avo Kanadjian, vice president of memory marketing for Samsung Semiconductor Inc. (San Jose, Calif.).
"It's forced all of us to reconsider our product plans," said Philip Eisler, director of component product marketing for ATI Technologies Inc. (Thornhill, Ontario), a graphics-chip maker.
Although Intel would not disclose a specific date for the revised launch, several sources say the Camino, or Intel 820 chip set, which was set for a June debut, will now reach volume production levels in late September. Attributing the delay to lingering design issues related to the chip set and support ICs, Intel said at the Intel Developers Forum this week in Palm Springs, Calif. that it will nevertheless strive to meet customer demand this year.
"Some of the parts need additional efforts," said Peter D. MacWilliams, an Intel fellow and director of platform architecture for the company's Desktop Products Group. "We've already seen samples, and we expect to see production parts in the second quarter a full quarter ahead of the 3Q ramp.
"From my point of view, this ramp is looking as aggressive or more aggressive than before, once this thing gets started," MacWilliams said. The Intel 820 is a crucial piece of silicon, because it enables a PC system to move to a faster, 133-MHz frontside bus and provides the interface for Direct Rambus DRAM, a long-awaited high-speed memory that is expected to boost PC performance in 1999. Initial Rambus-enabled platforms are aimed at corporate users willing to pay in excess of $2,500 for a desktop PC. Direct RDRAM chips are expected to account for between 10 percent and 15 percent of total DRAM sales this year, according to various projections.
However, persistent difficulties with Direct RDRAM manufacturing yields and issues related to clock-IC timing and printed-circuit-board impedance are preventing some semiconductor vendors from reaping the benefits of their new products as early as planned.
ATI rolled out a version of its latest graphics accelerator, the Rage 128 3D, this week, expecting a performance boost based on the Intel 820's support of a faster, 4X AGP graphics pipeline. Now, instead of touting that advantage beginning in June as it had hoped, ATI will have to wait until Intel's chip set schedule catches up.
"It makes it tough for the holidays, and then there's the whole year-2000 issue," Eisler said. "It's a tough time to have that kind of slip."
While chip suppliers will now have to adjust their product plans accordingly, the Intel 820 delay could actually help those companies trailing at the rear of the pack, according to some analysts. By the third quarter, for example, Intel expects six DRAM vendors will be in volume production with 128-Mbit Direct RDRAM, the density that most executives believe will drive the new memory interface.
"I think it gives [DRAM suppliers] time to ramp up, where before they may have been forced to put more wafer starts in the line to account for low yields," said Sherry Garber, an analyst with Semico Research Corp. (Phoenix).
However, for top-tier DRAM vendors looking to capitalize on the healthy profit margins that come with being first to market, the prospect of more company is far from welcome. "As far as [Intel's revised] shipping schedule is concerned, it's not as favorable to maximizing sales this year," Samsung's Kanadjian said.
Despite the inconvenience, Samsung, like most DRAM manufacturers, is familiar enough with the tumultuous memory- chip market to have built in safeguards. "I think that all along we had a very good understanding what the risks were, given all of the variables," Kanadjian said. "All along, we've operated knowing what the range would be in terms of demand."
In a related development, Intel responded to earlier reports that it would introduce an interim chip set in the second quarter to support a slower, 600-MHz Direct RDRAM clock speed by saying that, while the Camino family will drive the slower clock rate, it will now be introduced simultaneously in the third quarter with chips supporting full-speed 800-MHz Direct RDRAM.
In the event that Direct RDRAM falls into short supply, Intel also has added a new contingency to allow its customers to use standard PC100 SDRAM with the Intel 820. In addition to the so-called S-RIMM, which includes SDRAM and some logic gates in a Rambus memory module, Intel has introduced what it is calling the DIMM Riser card. The riser consists of a vertical board that plugs into the RIMM socket. Two PC100 SDRAM DIMMs are then hung off the board horizontally, and an interface chip is mounted to the board's backside, MacWilliams said.
However, OEMs are said to be unimpressed with the alternatives because of the need for providing long-term support, and will likely wait until ample Direct RDRAM supplies are available before embracing the new architecture, according to chip executives.
Intel's new Pentium III processor was not tied to the Camino launch, MacWilliams noted, but is expected to include support for the chip set. Currently, the Pentium III is designed to interface with Intel's existing 440BX chip set and PC100 SDRAM.