TAIPEI, Taiwan — Notebook-computer makers in Taiwan are facing a broad range of design challenges as they struggle to engineer machines for three different CPU pinouts and to reign in heat and noise problems.

The situation will only get tougher next year, when manufacturers will wrestle with an ever-expanding array of processor housings and electrical interfaces while facing down the sub-$1,000 notebook.

"Last year, Intel told us not bother too much with the minicartridge format," said a marketing manager for one midlevel Taiwanese notebook maker. "Intel said the minicartridge wouldn't be that popular. It turned out to be very popular, and we were left behind scrambling."

Intel plans to introduce four more CPU pinouts for Pentium II-level notebook products in 1999, sources here said. Besides Intel's current minicartridge and two Mobile Module Connector (MMC) options, it will offer two ball-grid-array (BGA) CPUs and two micro-pin-grid-array (PGA) options.

Sources here who have seen Intel's mobile-computing road map said that both the BGA and PGA CPUs will originally be made with 0.25-micron process technology but will move to 0.18 micron with a form factor of 21 x 24 mm in the second half of 1999. By that time, Intel's entire line of CPUs will have on-chip L2 cache but will require motherboard core logic. The original BGA and PGA CPUs will run at 366 MHz and will use about 9.5 watts. The second version of the PGA and BGA CPUs will consume about 6 W and run at 400 MHz when operating on battery power and up to 600 MHz when connected to a docking-station ac power source.

Which format to spend limited R&D resources on is the big question Taiwanese engineers are asking. "Intel says we should concentrate on micro-PGA, but that's what they said about MMC last year, when we got burned," said the marketing manager.

For its part, Intel hopes that a beefed-up design and test department will help ease the task of designing for so many CPU connections. "We are actively promoting an increase in our design and test-engineering support department to help smooth out the design process," said Joseph Lin, marketing manager for Intel's Taiwan operations. "We are increasing our technical support staff here in Taiwan to reflect its importance as a design center."

The two formats have pros and cons. "The BGA connection helps with heat dissipation," said the senior vice president of another midlevel Taiwanese notebook maker. "The CPU is soldered onto the mainboard. Thus, heat is dissipated across the entire pc-board. Basically, the mainboard becomes a large CPU card. On the other hand, the PGA format is socketable. There are heat issues, but with heat pipes and exchangers it should be okay."

While heat dissipation will remain a design issue into 1999, new components and production methods will help ease concerns about electronic noise next year. "We are getting spike compression on the clock generator for a clean square wave," said the vice president. "New ceramic and metal oscillators help achieve this. Multilayer board designs of eight to 10 layers improve bus speed and reduce noise with dedicated bus layers. We also design the trace patterns now with rounded-out right angles. At the production level, new surface-mount equipment allows us to mechanically insert new, smaller passives onto the mainboard."

Another area that in the past has been a problem — cost and availability of TFT screens — is not one at this point. "LCD prices fell dramatically this year," said the marketing manager. "Supplies will stay plentiful and cheap for a while. Shortages of the smaller screens may occur next year as all the suppliers want to move production into the larger-format panels."

Cost plus margins
Another trend that will severely tax Taiwanese notebook makers is their relationship with the large OEM notebook labels. "A few years ago, we gave a potential OEM a prototype and a price for the product," said the marketing manager for a second midlevel Taiwanese notebook maker. "Now, they go over our bill of materials [BOM] part by part. For some parts they say, 'Never mind, we can source that part for less ourselves and will arrange to ship it to you.' They add up the BOM, give us $20 for labor, some more for administrative and R&D costs and say, 'This is what we'll pay. Take it or we'll just go down the street to your competitor.' "

Notebooks "used to be one of Taiwan's higher-margin product segments," the manager lamented. "Now there are too many competitors and the OEMs run the game."

All the notebook makers contacted for this article agreed. "There are just too many notebook makers here chasing too few customers," said the vice president. "Another trend here is that more and more of what we ship to OEMs are bare-bones notebooks. On the one hand, we lose the high-value-added part of the process. On the other hand, though, we don't face the potential risk of being stuck with a large inventory of expensive but constantly cost-eroding components."

One product segment that will test the Taiwanese ability to drive costs down next year is the sub-$1,000 notebook. As with most things in this market next year, thoughts differ on how to best approach this segment.

"Sub-$1,000 notebooks will be really tough to cost-effectively produce," said the first marketing manager. "It certainly won't be an Intel solution. An Intel MMC CPU currently runs $710. An AMD K6-2 is about $125. Sure, the K6 needs core logic and L2 cache on the mainboard, but what's that — another $30? We see Socket 7 notebook solutions having a life well into 1999."

Others see a sub-$1,000 notebook as not only easy to build but even profitable. "There are several ways to build a sub-$1,000 notebook, all of which can be profitable," said the vice president. "One way is to use EOL [end-of-life-cycle] components."

Still others look toward Microsoft's Windows CE as the answer. "Everyone is trying for a standard sub-$1,000 notebook but it will be tough to do," said an official at a fourth notebook maker. "CE 2.11-type devices may become the trend."

Such machines are small "function products" with at least an 8-inch screen. They have no disk storage, only flash memory modules. They use Microsoft's stripped-down CE OS and truncated versions of Microsoft Office applications. Since they threaten the "mininotebook" segment, some Taiwanese notebook makers are less than enthusiastic about them.

"Large OEM orders for CE 2.11 products will be a necessity," said one Taiwanese notebook maker. "The licensing fees don't favor the production of small volumes of CE devices."

At least one Taiwanese notebook maker doubts the long-term potential of CE. "Personally I'd rather pay $900 for a mini-notebook with Windows 95, a 95 percent-size keyboard and a hard drive," he said. "They will weigh in at four pounds and will be about 1 inch high."