Intel Corp. will launch a new processor this week, but unlike the companys more recent chip launches, this product will likely face an uphill climb for acceptance.
The DSP (digital-signal processor), which Intel and co-developer Analog Devices Inc. plan to unveil at a press conference in New York, will be used in such electronic devices as cell phones, according to sources.
The new chip highlights Intels efforts over the last two years to broaden its revenue base beyond products for PCs and servers. But while the Santa Clara, Calif., company has firmly established itself as the dominant PC and network microprocessor maker, it is a relative outsider in the fast-growing DSP market.
Intels eagerness to enter this market is understandable considering the potential lucrative rewards, observers said. DSP sales are on the rise due to strong sales of mobile phones, and that trend is expected to continue in the future when other devices that use DSPs—such as wireless handheld computers, set-top boxes and digital subscriber line modems—become mainstream.
One major obstacle in Intels path to DSP profitability, however, is Texas Instruments Inc.
Since 1996, TI has focused its attention on developing DSPs, shedding a number of business units on the way. That focus has paid off as products from the Houston-based company now account for about 50 percent of DSP sales, according to market research company Dataquest Inc., of San Jose, Calif.
Further strengthening TIs hand is that a majority of system designs already under development are believed to be based on its DSP architecture.
"Seventy to 80 percent of the engineers doing designs in the industry today are familiar with the DSP software for the TI architecture," said Hans Mosesmann, an analyst with Prudential Securities Inc., in San Francisco.
One way Intel might try to make inroads is to focus on the expected surge in development of wireless computing appliances, said Marcus Levy, an analyst with MicroDesign Resources, in Sacramento, Calif. It could do that by combing Intels X-Scale architecture (formerly known as StrongARM) with DSP technology that Intel has gained through a dozen acquisitions over the last two years, Levy said.
"I imagine theyre going to marry this DSP stuff with the X-Scale on the same die," Levy said. "My guess is that theyre going to go after 3-D applications, streaming media—high-performance, low-power kind of stuff."
Still, with mobile phone giants Ericsson Inc. and Nokia Corp. as customers, TI has a formidable lead.
But the rapid growth of the DSP market will likely work in Intels favor, as TI will be hard pressed to keep up with expected demand for the embedded chips. Dataquest projects 22 percent compound annual growth in DSP sales through 2002, with the market growing to nearly $10 billion.
Although Intel and Analog officials declined to comment on their new chip, both companies confirmed that they will make a DSP announcement.