TI favors 486SX over 'Rio Grande' merchant effort

Electronic News, Sept 26, 1994 by Reinhardt Krause

DALLAS, TEX.--Texas Instruments last week said it will not release its "Rio Grande" 486-based chipset to the merchant market, confirming earlier reports that its integration strategy had backfired with prospective customers (EN, July 25). In a back-to-the-basics strategy, however, TI is using its manufacturing clout to make a move in the still viable 486SX-class MPU market.

Despite its continuing strife with one-time partner Cyrix Corp. and the disappointment over its Rio Grande strategy, TI is still planning to be a major player in the x86-compatible CPU market. The company is readying another MPU, originally code-named Yukon, for introduction later this year.

Another maneuver will be moving its DMOS-5 megafab, now under construction, into x86 production by mid-95, said Leon Adams, manager of worldwide computer segment marketing, semiconductor group. TI has already made an aggressive move in the 486SX market by driving down the cost of its 486SXLC2 and TI486SXL2 processors.

TI last week said it is now shipping 40MHz versions of the devices for $50 and 50MHz parts for $65. TI said it expects to drive down pricing even further when it moves to thermally-enhanced plastic packaging next year and opens the new megafab in Dallas. The current parts are packed in ceramic pin grid array.

Based on its 3.3V, 0.5-micron process technology, TI also plans to push the x486SX-class devices to 66MHz speeds and beyond. "We're driving toward a dollar a megahertz," added Mr. Adams. "Intel, AMD or any of the others really don't approach that."

When introduced last year, the TI486SXLC2 and TI486SXL2 were priced at $110 and $139 for clock-doubled 40MHz versions (EN, Oct. 11, 1993). While the average selling prices in the SX area have been falling in the industry, from about $125 earlier this year (EN, April 4), TI's move is still aggressive, said industry observers.

Mr. Adams said the DMOS-5 megafab "will be driven with this 486 processor product." TI is currently using two or three other fabs for its x86 products and will continue to use them as needed. "We are basically bringing on caapcity to ship what the market can take from us. We see an ability to ship many millions of units in 1995."

While Intel is attempting to transition the PC industry to the Pentium and Advanced Micro Devices (see story on this page) is introducing DX4-class MPUs, TI is hoping to capitalize on continuing demand for SX-class machines. In the Far East, for example, companies such as Singapore's Wearnes Technology are pushing entry-level 486SX machines into developing countries. TI believes the 486SX-based market still has strong potential in markets such as China, South America and Eastern Europe.

In addition, Compaq has told analysts it anticipates a strong shipment of 486SX2-based systems this fall, largely for the U.S. home market.

Mr. Adams also said TI is also negotiating with Microsoft to initiate a marketing strategy for its SX-class processors that would promote their ability to run the upcoming Windows '95. a.k.a. Chicago, operating system.

"We're not saying that Pentiums aren't going to sell at a reasonable clip, they are," Mr. Adams said "but the type of market they're going to penetrate is more of an upgrade market and a replacement market. It's more performance differentiated. A lot of the original Pentiums may have been sold into the home, but that was based on the fact that there was disposable income of semi-power users in the home that were doing upgrade or replacement in the home. There is not a large percentage of first-time Pentium users in the home."

Despite an upbeat assessment on the 486SX market, TI conceded last week that customer reaction to the Rio Grande technology announcement (EN, Feb. 14) had been disappointing. The chipset included a 66MHz 486 CPU incorporating a Peripheral Component Interconnect (PCI) local bus controller and a memory controller on-chip; a PCMCIA card controller and a peripheral controller.

TI began downplaying expectations for the chipset in July, and had alternately described the targeted market as mainstream notebook PCs, super-portable PCs, value notebooks, entry-level notebooks and sub-notebooks.

"We have completed prototyping of a Rio Grande chipset--the PCI integrated 486 CPU, the Combo chip and the PCMCIA to PCI bridge--and we have first pass silicon success on that," Mr. Adams said. "But in light of a lot of market turbulence in the sub-notebook arena as well as some of the processor market turbulence, we've made the decision not to release Rio Grande to the marketplace at least in its entirety."

He said TI is releasing the PCI-to-PCMCIA bridge chip and is considering releasing the "Combo" chip, however.