Intel prepares for next-gen value processors - In-Stat/Insights

Electronic News, Feb 18, 2002 by Kevin Krewell

INTEL CORP. IS WELL INTO A GENERATIONAL processor change that is as important as any previous change (that is, 486 to Pentium and Pentium to Pentium II).

The Pentium 4 is Intel's seventh-generation (often called P7) of IA-32 processors, and it is a processor designed to perpetuate Moore's Law--that processor frequency doubles every 18 to 24 months. Intel's desktop value processor, the Celeron, will also undergo the same change in 2002 to this P7

microarchitecture. This generational change is important enough that Intel may consider rebranding the P7-based processor as the "Celeron2." Unlike desktop Celeron processors, we don't expect the mobile Celeron to transition to the P7 microarchitecture and will wait until 2003 for a unique mobile solution.

We expect Intel to continue using defeatured versions of mainstream performance processors for the value (Celeron) segment. Typically, Intel Celeron processors have only half the L2 cache of the performance (Pentium) processors. The reason for this approach is that Intel devotes minimal engineering and marketing resources to the value market, owing to the unattractive Intel margins in this market. Ironically, this is also the market segment in which Intel faces the most competition. Yet by using the same die for both the value and performance segments, Intel has the flexibility to shift finished wafers to either segment to meet changing market conditions.

In 2001, Intel drove the Pentium 4 into mainstream performance desktop PCs, making the Pentium III obsolete. The larger die and high power of the initial Pentium 4. code-named Willamette, precluded replacing the Coppermine core in mobile and value systems. But the latest, 0.13-micron process generation cools the processor and shrinks the Northwood Pentium 4 to a more manufacturable size. Intel will use the process shrink and the P7 (Pentium 4) microarchitecture's ability to scale in frequency to maintain a speed lead over Advanced Micro Devices Inc.'s (AMD) processors.

Intel will not use the P7 microarchitecture in its mobile value (mobile Celeron) segment but will use defeatured versions of Tualatin (which we call Tualatin-256) in 2002. Intel has recognized that mobile goals require a unique microprocessor design, and in 2000 it began developing the Banias processor. Banias will likely have a highly integrated chipset that combines memory controller, south bridge functionality, graphics controller and offer high-integration networking connectivity, which could include wireless networking. Intel will use a defeatured Banias--which we call Banias-lite--in the second half of 2003 for mobile Celeron and by the end of 2003 should reach nearly 2.0GHz.

Intel will offer support for DDR SDRAM and SDRAM with the Intel845 chipset for the P7-derived desktop Celeron. It will also add integrated graphics to the Pentium 4 chipset in mid-2002 to support a lower-cost infrastructure. We expect a slightly defeatured version of that chipset will also be offered in the value space. Mobile Celeron chipset support will come from the Intel83OM. Banias will come with its own highly integrated chipset. The chipsets will offer support for both DDR and standard SDRAM for low cost and easy availability. In 2003, we expected DDR SDRAM to become the memory of choice for the value PC market.

AMD, Transmeta and Via Technologies Inc. continue to nibble at Intel, offering different combinations of performance, power and price. Nevertheless, Intel should maintain a dominant market share in the desktop value market with its manufacturing might, competitive processor architecture and by modulating pricing to meet competition. Mobile value would appear to be Intel's weakest value position because mobile Celeron lacks the power management features of AMD's mobile Duron, Via's C3, and Transmeta's Crusoe. This is the competitions' best opportunity to gain some market share, albeit at low ASPs.

Kevin Krewell is an analyst with Cahners In-Stat/MDR. In -Stat is owned by Cahners Business Information, the parent company of Electronic News.