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Computer peripherals industry

Intel Enters Graphics Chip Market, Sends Ripples Through Industry

Strategic Insights

— 2 min read

Intel Corp.'s announcement Thursday that it will manufacture a 3D graphics chip, the Intel740, sent shockwaves throughout the chip industry. The Intel chip, which will enhance graphics applications such as games, multimedia, and video, will compete directly with chips produced by smaller companies including NVidia, ATI, and Rendition. Intel's market position, deep pockets, and brand name give it a significant advantage in a market that has traditionally been the domain of specialized companies.

Intel's entry into the graphics chip market is likely to send several companies scurrying out of the business as competition heats up. Cirrus Logic, which owns Austin's Crystal Semiconductor, has already announced plans to exit the low-end graphics chip business. This exit is a result of Cirrus's failure to keep up with the consumer market, leading to a significant decline in its market share.

Intel's graphics chip, the Intel740, will be used in graphic accelerator cards and will take advantage of Intel's Accelerated Graphics Port (AGP) technology. The AGP interface is designed to provide more direct and faster 3D processing than traditional computer motherboards. This chip is particularly suited for graphics-intensive applications such as games and multimedia, allowing for faster and more realistic graphics rendering.

Several top-of-the-line consumer graphic accelerators sell for less than $200, with the chips themselves selling to accelerator makers for about $20 to $30 per chip. Intel plans to introduce the Intel740 at $34.75 per chip in units of 10,000. Peter Glaskowsky, senior analyst at Microprocessor Report, expects the Intel chip to sell millions of units and believes Intel will aggressively target the mainstream market.

Key Takeaways:

  • Intel Corp. announced that it will manufacture a 3D graphics chip, the Intel740, which will enhance graphics applications such as games, multimedia, and video.
  • The Intel chip will compete directly with chips produced by smaller companies including NVidia, ATI, and Rendition.
  • Intel's market position, deep pockets, and brand name give it a significant advantage in a market that has traditionally been the domain of specialized companies.
  • Cirrus Logic, owner of Austin's Crystal Semiconductor, has announced plans to exit the low-end graphics chip business.
  • Intel's graphics chip, the Intel740, will take advantage of Intel's Accelerated Graphics Port (AGP) technology.
  • The AGP interface is designed to provide more direct and faster 3D processing than traditional computer motherboards.
  • Peter Glaskowsky, senior analyst at Microprocessor Report, expects the Intel chip to sell millions of units and believes Intel will aggressively target the mainstream market.
  • AMD Inc. will begin making chips for one of the promising methods of speeding up Internet connections using technology from Alcatel.
  • AMD's deal with Alcatel will allow it to push its products further into network hardware.

Statistics:

  • Intel's market share in the microprocessor market is 85%.
  • Cirrus Logic's market share in the graphics chip market has dwindled.
  • Top-of-the-line consumer graphic accelerators sell for less than $200.
  • Chips themselves sell to accelerator makers for about $20 to $30 per chip.
  • Intel plans to introduce the Intel740 at $34.75 per chip in units of 10,000.
  • Shares of Intel fell 6 1/4 cents to $85 a share on Thursday.
  • Shares of AMD fell 12 1/2 cents to $19 a share on Thursday.

Sources:

  • Intel Corp.
  • NVidia
  • ATI
  • Rendition
  • Cirrus Logic
  • AMD Inc.
  • Alcatel
  • NetSpeed
  • U S West
  • Microprocessor Report
  • Austin American-Statesman

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