October 1999 Industry Update

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Chipset Update

Tied very closely to the motherboard issues, are chipset issues. Regardless of whether Intel has put pressure on to manufacturers, the fact remains that the AMD 750 chipset has been a big part of the reason that boards are not in abundant supply. The first version had serious problems with many power supplies, which actually would render the chipset non-functional. This was fixed before the first retail boards were released, however continuing stability problems have plagued manufacturers trying to make boards.

Early on, it appeared that the AMD chipset issues were not a reason for major concern, because VIA was supposed to have their chipset out by October. Since then, the earthquake in Taiwan and the sluggish market demand has caused them to focus on their Slot 1 chipsets. In fact, with the introduction of the Apollo Pro133A chipset early this week, sources close to VIA have reported that resources are being diverted from the KX133 chipset so that VIA can take advantage of the BX chipset shortage. VIA reportedly expects to ship 3 million chipsets in October – which would be a new record for them. The most recent information indicates that the KX133 will probably not happen until Q1 ’00

This situation may cause more problems for AMD in the short run. Though AGP 4x and PC133 are mostly marketing hype, rather than real performance enhancements, the lack of these features on the AMD 750 chipset has many manufacturers worried. The fear is that when consumers compare i810E chipset based boards with AMD 750 chipset based boards, they will see the i810E as a higher-end board! AMD has indicated that they will not do ‘incremental’ improvements to their chipset – which AGP 4x and PC133 are. Instead, they will only make changes when ‘major’ improvements are necessary, such as adding DDR support. AMD has mentioned SiS as a possible Athlon chipset provider, but so far no official word has been given on this.

On the positive side, if AMD is able to hold on until the KX133 chipset is available, it will not only include the ‘marketing’ features, but will allow manufacturers to build 4-layer boards, which will reduce the selling price to around $100 (as opposed to about $170 currently).

As alluded to above, Intel has not been immune to chipset issues themselves. The i810 was delayed several times due to problems earlier this year. In August, increased demand and reduced production created a shortage of BX chipsets. This caused the spot price to double during that month. In fact, there apparently was a major remarking operation in Asia where VIA South Bridge chips were being remarked as Intel South Bridge chips (they are reportedly pin-compatible). This was not widely publicized, because manufacturers feared that BX motherboard sales would suffer.

The official Intel roadmap shows the BX chipset being completely phased out in Q1 ’00, with the i820 chipset replacing it. Due to this, production of BX chipsets was seemingly reduced to supply only the contractual requirements. High demand gave Intel leverage to put motherboard manufacturers on allocation, giving rise to the allegations of ‘strong arm’ tactics to prevent Athlon boards from being produced. When the i820 chipset was pulled, manufacturers realized that between 70% and 90% of their sales depended upon BX chipset based boards – not a comfortable position to be in

Though the situation seemed quite good for Intel, it may have caused a backlash that will give VIA a lot more market share in the coming months. Manufacturers do not want to be put into a situation where they are at the mercy of one company for the majority of their revenues – and particularly a company which has a reputation for leveraging their power to force manufacturers to follow the ‘party line’. Expect VIA to sell a lot of Pro133A chipsets, however until corporations begin to feel comfortable with non-Intel chipsets (and processors), Intel will still have the lion’s share of the market

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