Intel brings tiny P4 to chip wars

Intel is next week expected to announce two low-cost, high-performance Pentium 4 (P4) chips, countering criticism that the P4 is expensive in comparison to the competition.

The two chips, both developed under the codename Northwood, will run at 2GHz and 2.2GHz and are the first to make use of Intel's 0.13 micron production facilities, the first of which was opened last October in Arizona. Previous chips were made using 0.18 micron process.

"As we move out of recession, companies which will do well are those with products that people want," said Michael Splinter, Intel's executive vice president for worldwide sales and marketing, adding that Intel spent £4bn on research and development last year.

The fastest P4 already available runs at 2GHz but benchmarks have shown poor overall performance when compared with chips such as AMD's Athlon XP 1800+, the reason being that it achieves less work per clock cycle. So the new chips will include a secondary cache of 512Kb instead of the current 256Kb.

In spite of the increased cache, the new chips will be smaller and cheaper than the current 214 square millimetre size which is estimated to cost about £70 to manufacture.

Each chip will include smaller and faster transistors, which improve performance while decreasing power consumption. Size estimates for the new chips vary from 115 to 145 square millimetres. The chips are expected to cost about £38 to make once production is ramped up.

But chip users should not expect dramatic price reductions. Intel had a drastic profit fall of almost $2bn against target in the third quarter last year, while maintaining a high research and development spend. The company is now expected to claw back some of its shortfall.

Competitor AMD went into the red because of the chip price war and will likewise want to set higher prices as demand picks up.

Splinter said Intel was expecting Microsoft's Windows XP to attract more home and business PC users to use the P4. But Martin Reynolds, of analyst Gartner Group, was more cautious about 2002.

"[Intel's] dependence on its processor product line brings blessings in good times and challenges when things slow down. Through 2002, financial pressures will force companies whose revenues are generated from PCs to make hard decisions about where and where not to invest," he said.

AMD will also keep the pressure on Intel with its own 0.13 micron-based chip, codenamed Thoroughbred, which is due out this quarter and thought to be even smaller at about 80 square millimetres.