Intel Sets Sights on New Markets, to 'Systems-on-a-Chip'

• SEPTEMBER 18, 2009

Intel Sets Sights on New Markets

Industry Giant Looks Beyond Microprocessors to 'Systems-on-a-Chip'

By DON CLARK

Intel Corp. will soon introduce chips based on a new manufacturing technology it hopes will help the company attack potentially tough new markets as well as boost computer performance.

Intel

Intel says its new production process will make it the first to offer 32-nanometer chips. Above, an Intel worker in a clean room where processors are developed.

Intel has said the new production process will make it the first to offer chips with circuit dimensions measured at 32 nanometers -- or billionths of a meter -- compared with a 45-nanometer process it adopted two years ago. The company said this week it has begun manufacturing the new chips, which will be sold to computer makers in the fourth quarter.

Shrinking transistors and other circuitry boost chips' performance and data-storage capacity while reducing manufacturing costs. For this reason, Intel and its rivals are always racing to develop new production processes.

This time Intel, which commands four-fifths of the market for the microprocessors that act as calculating engines in computers, plans to simultaneously introduce two versions of its 32-nanometer production process. One will make chips for computers; the other will be tailored for "systems on a chip," or SoCs, which are multi-function chips used in consumer-electronics devices such as cellphones, cars and other applications outside the computer industry.

Intel Chief Executive Paul Otellini has identified such markets as an essential part of the company's growth strategy. But the company can't just rely on one of its biggest historical advantages -- the array of programs that run on its chips -- since many SoCs use specialized software.

Instead, Intel plans to make a case that its 32-nanometer technology offers big benefits over the production processes historically used by companies that serve the SoC market. "They have not kept up," said Sanjay Natarajan, director of 32-nanometer logic process development.

Among other things, Mr. Natarajan said, Intel can offer customers a choice between extremely high performance -- including transistors that are about 22% faster than 45-nanometer versions -- or opt for slower speeds but low power consumption, a benefit in extending the battery life of cellphones and other products.

The SoC market poses new challenges. Intel must offer a range of components that it doesn't typically include on its microprocessors and compete more directly with manufacturing services known as foundries that have long served SoC makers.

"The design side of it is more complex," said Risto Puhakka, an analyst at market researcher VLSI Research. "It's really venturing outside the classic computer-industry model."

Rivals expect to be close on Intel's heels. Gregg Bartlett, senior vice president in charge of technology at Globalfoundries -- a manufacturing spinoff of Advanced Micro Devices Inc. -- said it expects to be making 32-nanometer chips next year. His company's advantages, he said, include membership in a technology alliance that includes International Business Machines Corp. and other manufacturers.

Intel, which has pledged to spend $7 billion to add 32-nanometer technology to its U.S. plants, is initially using the technology on Westmere, a version of a chip line called Nehalem that is packaged with a chip to manage graphics -- a move to save space and boost performance.

The company's first 32-nanometer SoCs are expected early next year. In the meantime, Intel next week plans to discuss Jasper Forest, a 45-nanometer SoC targeted at products such as communications and data-storage equipment. On Thursday, it is expected to follow up with Sodaville, another 45-nanometer chip for digital TVs, set-top boxes and media players that combines its Atom microprocessor with circuitry for graphics, video and other functions.

Write to Don Clark at don.clark@wsj.com