TAIPEI, Taiwan ( ChipWire) -- It's marketing tremors from Intel Corp., not the aftermath of Taiwan's recent earthquake, that weighs on the minds of the island's three independent core-logic chip set suppliers -- Via Technologies Inc., Silicon Integrated Systems Inc. (SiS), and Acer Laboratories Inc. (ALI).

Although each of the trio has beaten Intel to the punch by rolling out chip sets equipped with a PC133 SDRAM interface, they are bracing for Intel to come roaring back next year with a competitive PC133-enabled device of its own. After months of characterizing the PC133 standard as a non-starter, Intel threw its support behind the memory interface in August. But even after embracing the technology due to the lack of Direct Rambus DRAM availability, Intel wants to retard PC133 adoption until it can get its own chip- set into the market next year, according to many analysts.

The market's current suppliers are not having an easy time establishing their posititions. Via, which launched the industry's first PC133 chip set this fall, has put customers on allocation because of the surge in orders, said Jonathan Chang, vice president of operations and sales for Via (Taipei, Taiwan).

Pumping out additional chip sets will be a challenge for Via, which was counting on IBM Microelectronics as a second source. But IBM told EBN last week that it won't produce the Via Apollo Pro 133 chip set, or manufacture it for itself. IBM would have given Via much-needed leverage in the market.

Chang said Via will continue negotiating with IBM in an effort to boost supply. Currently, National Semiconductor Corp. is Via's only manufacturing source.

Legal issues also are preventing Via from signing other foundries as alternate fab sources. Intel this summer filed suit to stop Via from using unlicensed foundries to manufacture PC133 chip sets, which are designed with Intel's 133-MHz processor frontside-bus technology and AGP 4X graphics link. As of last week the standoff continued, Chang said.

Despite the legal wranglings, Via's president, Wen-chi Chen, said the company hopes to ride the crest of the PC133 market and surpass Intel as the leading chip set producer by 2001. Via expects chip set sales this year will exceed $300 million.

"Actually, Via could help Intel by increasing the demand with our chip sets, connecting Celeron processors with the higher-speed PC133 memory," Chen said.

"It doesn't make sense for Intel to be in the low-cost chip set business for Celeron," he said, and suggested that Intel focus on higher-end, higher-margin chip sets.

SiS, which recently added PC133 support to its chip sets, expects to directly compete with Intel on chip set production next year when it opens its first fabrication facility. Adjoining its Hsinchu Science-based Industrial Park headquarters, the facility will be able to leverage CPU technology that SiS has licensed from microprocessor vendor Rise Technology Co.

Alex Wu, director of SiS' desktop division, said the company needs its own fab to achieve $1 billion in sales by 2002. "At that level, we would have 35,000 eight-inch wafer starts a month, making our own fab very cost-effective," he said.

The SiS fab will start pilot-line production in February 2000, and enter full production in the second half of next year. The fab initially will use quarter-micron processing, which Wu said will be upgraded to 0.18 micron by the end of 2000.

SiS relies on Taiwan foundries and has some of its chip sets produced by Chartered Semiconductor Pte. Ltd. in Singapore, an arrangement that ensured supply regardless of any disruption the earthquake might have caused Taiwan's foundries.

"We're getting excellent service. In fact, we will continue to use [Taiwan's] foundries for some of our chip sets," Wu said.

Showing some guts, SiS will be the only chip set maker of the three to have its own fab. Via will continue to use foundries for its chip sets and has no desire to build its own fab, Chen said.

But SiS' courage really showed when the company shipped its 630 chip set with integrated graphics functions eight months before Intel's 810.

"They took a big risk introducing the first integrated chip set long before Intel," said Chin Wu, president of rival chip set manufacturer ALI (Taipei). "Now, integrated chip sets look like a growing trend. It will depend on how successful Intel is with the 810. Because of their market dominance, they set the pace."

ALI is also ramping up to grab chip set sales from Intel. The company recently introduced a spate of products, and in August rolled out its first integrated core-logic chip set, the Aladdin, which uses Nvidia Inc.'s TNT-2 graphics technology.

In addition, ALI will add PC133 support to chip sets this fall for both Intel's and Advanced Micro Devices Inc.'s processors, Wu said. This quarter, the company will start production of an AMD Athlon chip set, having built a strong sales base with chip sets supporting AMD K6 processors, particularly for notebooks.

Unlike SiS, ALI isn't into taking big risks. The company is making an effort to diversify, with plans to expand into the emerging DVD drive market. ALI is currently producing an MPEG-2 video and audio decoder and controller chip set that will ship in volume this quarter. "Intel's not there," ALI's Wu said. "[DVD chips] will prepare us to expand into the Internet appliance market as it develops."

Via also is expanding beyond PC133 chip sets, and plans to support double-data-rate SDRAM "whenever the market wants it," Chen said. Via will not support Direct Rambus DRAM, however. "DDR is going to be a far bigger selling product than Rambus," Chen said.

Intel has said it is considering producing its own chip set to support DDR for servers, and once again Via believes the two companies can complement each other in the market.

"We have already helped Intel in the 440BX [chip set] shortage," Chen said, claiming that without Via's compatible chip set line as an alternate source, Intel's microprocessor sales could well have suffered.

Chen declined to comment on industry reports that Via is developing a chip set for IBM's and Motorola Inc.'s PowerPC processors. He would only say that Via's goal is to develop core chip set technologies that can be used in a mix-and-match design "to create a general-purpose family of chip sets for all CPUs."