Napalm, likely to be called Voodoo4, has twice been delayed, and that may have been a factor in last month's the resignation of L. Gregory Ballard, president and chief executive officer. A new CEO has yet to be named.

While the costs of integrating STB Systems, acquired in May, will contribute to 3dfx losing money this year, "Napalm is the main reason for the loss," David Zacarias, chief financial officer and vice president of administration, said at the AEA Classic conference here this week.

With 14 million transistors, Napalm proved a challenge for back-end place and route. "It was so complex, it was breaking some emulation tools. It took a long time to verify," he said. The company is confident that the chip will be ready in the February-April fiscal quarter, Zacarias said.

Demand for the Voodoo3 is quite strong, he said, but the San Jose-based company has been forced to cut its price in the face of competition from Nvidia's GeForce chip. Without a hot new product in the Christmas season, 3dfx seems certain to lose some share in the retail market, where it is the leader.

"3dfx has imploded, basically," said Kenneth Potashner, CEO of rival S3 Inc., during his presentation at the same conference.

But Zacarias tried to stress the positive, noting that 3dfx sells through 30,000 retailers, more than any vendor. The STB acquisition has given it a strong base of OEM business, with about half of all its units now sold through that channel. Because OEMs pay significantly lower prices, however, 3dfx receives 30 to 40 percent less revenue than through retailers, he added.

Napalm, described as the first gigapixel product of its kind, will be very competitive with GeForce, he claimed. And coming right behind it will be a completely new architecture, code-named Rampage.

"We've spent the last 18 months having 30 engineers designing a new core from the ground up," Zacarias said. The firm expects to introduce Rampage in the first half of 2000, with production slated for the second half. An iteration of Rampage, called Sage, is in development for 2001, and a low-end version of Napalm, called Napalm LC, should be out by the end of 2000, he added.

3dfx hasn't pursued an integrated graphics-core logic chipset, as have S3 and Via Technologies with the joint venture announced earlier this month.

"Our thinking is that will be Intel's domain. It's potentially a high-volume market with no margins. Via and S3 are standing in the railroad tracks with a freight train bearing down," Zacarias said.