SAN JOSE -- Samsung Electronics Co. Ltd.'s costly efforts to enter the microprocessor field may have abruptly ended this week, especially after Compaq Computer Corp.'s decision to kill the 64-bit Alpha processor by 2004 or so.
In 1998, Samsung created a U.S. joint venture with Compaq--called Alpha Processor Inc. (API)--to help it enter the high-end processor market. The venture was also aimed at expanding Samsung's non-memory chip business.
At the time, Samsung and Compaq invested $500 million in Alpha Processor. As part of the plan, Compaq developed the Alpha processor architecture, while Samsung served as the foundry for the chip line.
Alpha Processor, now called API NetWorks Inc., was supposed to develop boards, chip sets, and other products based on the processor.
During the formation of Alpha Processor, Samsung had high hopes for the venture. The Korean chip giant expected the Alpha processor offering to bring in over $3 million in sales in 1998. Its sales target for the Alpha was set for $100 million in 1999 and $1.5 billion over the next five years (see Nov. 30, 1998 story ).
But analysts believe that Samsung fell far short of its original expectations. The company had only a few foundry customers for the chip, most notably Compaq. But still, the processor line only represents a tiny fraction of Samsung's overall chip business.
And on Monday, the Korean company received another blow, when Intel Corp. signed a deal to essentially take over Compaq's Alpha processor technology. As part of the deal, Compaq will move all of its 64-bit server and workstations to Intel IA-64 bit processors by 2004, thereby ending its development on the Alpha chip (see June 25 story ).
While Samsung will continue to make the Alpha chip on a foundry basis for Compaq and others, the processor is doomed in the long run, analysts said.
A spokesman for Samsung's U.S. subsidiary in San Jose said the company will continue to make the chip--at least for now. "We are still manufacturing Alpha," the spokesman said.
Meanwhile, API NetWorks will continue to sell Alpha-based chip sets and systems, but the Concord, Mass.-based company will focus more on developing products for the HyperTransport bus market (see today's story ).