Taiwan Flexes Its PC Muscle

TAIPEI (06/12/2000) - As Via Technologies Inc. prepares to ship its first Cyrix III microprocessors later this month, it will mark the first time a homegrown Taiwanese company will be able to supply the central processing units which are at the heart of every PC.

Taiwan has long been among the world's leaders in supplying most every part needed to build a personal computer. Now, the only obstacle to making a 100 percent Made in Taiwan PC will be hard drives, the last missing piece to the puzzle.

To be sure, the advent of the first processor carrying the brand of a Taiwanese company will be the result of engineering efforts acquired through the purchases of two U.S. companies rather than an internal research breakthrough.

That's not to say that Via lacks pedigree in the fine art of microprocessor design. Chen Wen-chi, the company's president and chief executive officer, says he once worked as a CPU designer at industry behemoth Intel Corp.

It will mean, however, that the island's hardware makers for the first time will be able to source the crown jewel of the PC industry from a domestic supplier.

Getting there hasn't been without its problems. A few months ago, Chen had a crisis on his hands. The majority of a Richardson, Texas-based engineering team that Via inherited last year when it purchased National Semiconductor Corp.'s Cyrix unit walked, leaving behind them an almost-finished processor that Chen had banked on becoming his first volume offering.

"It was not one of our happiest moments," said a Via official.

Fortunately for Via, the company last year also acquired a second processor design team from IDT Inc.. The Centaur Technology team, based in Austin, Texas, rose to the occasion and was able to fast-forward the rollout of the Cyrix III processors that Via is now preparing to ship.

Unlike Intel and Advanced Micro Devices Inc. (AMD), Via does not boast any production facilities of its own. Instead, Via relies on contract chip manufacturers, known in the industry as foundries. The foundry business, currently one of the worldwide semiconductor industry's fastest growing segments, is the brainchild of Taiwan Semiconductor Manufacturing Co. Ltd.

(TSMC) Chairman Morris Chang.

Although Via is likely to become a bottom feeder rather than pose a serious challenge at the high-end of the market to Intel or AMD, the company has already proven that it has the ability to drive industry standards.

The PC133 memory standard was driven by Via in cooperation with memory chip makers such as South Korea's Samsung Electronics Co. Ltd. Against the stated will of mighty Intel, Via last year garnered industry support for PC133, and in the process became the PC industry's second largest supplier of chip sets, the processor companion chips that PC motherboards are designed around.

Intel responded by taking Via to court, alleging that some of its chip sets infringed on Intel's intellectual property rights. The case is pending, but hasn't done much to slow Via's sales.

Apollo chip sets are still the company's main product line, with Via currently boasting market share of around 30 percent in desktop PCs. "By the end of the year, I am confident that we will reach 50 percent market share," says Chen.

Buoyed by a 270 percent revenue increase during the first five months, Chen now confidently predicts that the company will break the $1 billion mark this year.

Ironically, a large chunk of Via's revenue growth this year is based on supplying chip sets to systems powered by rival AMD's processors. AMD, in fact, is banking on Via's new KT133 offering, which it promotes as the chip set of choice for PC makers looking to design systems around new socketed versions of its high-end Athlon processors.

For Via's marketing officials, a recent naming glitch served as a reminder of the increased scrutiny the company will face as it becomes one of the industry's key suppliers. On a European tour to promote the new Athlon chip set, which then was called KZ133, officials were puzzled by the reaction that met with them. They soon realized that to many Europeans, KZ133 carried an unfortunate connotation to wartime concentration camps. The chip set was quickly renamed KT133, and Via issued an apology.

Acer Group founder and Chairman Stan Shih, together with TSMC's Chang are seen by many here as the visionaries behind Taiwan's emergence as a high-tech industry power. If Chen, a devout born-again Christian, is able to establish Via as one of the industry's key suppliers of processors, he may well bring new recognition to the island.

Chen, in fact, has already embarked on his next mission: to help establish Double Data Rate SDRAM as the next main memory standard in PCs, in direct competition with Intel, which is promoting a competing technology developed by Rambus Inc.

PC133 was one of the very first PC industry standards originating in Taiwan.

Chances are many more will follow as the island continues to climb higher in the industry's food chain.

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