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Chipmaker is dead, long live the chipmaker

Chipmaker is dead, long live the chipmaker

There could be one less member of the Intel resistance after the recent announcement by semiconductor provider IDT to withdraw from the x86 microprocessor market. But according to IDT's Australian master distributor, Legend Performance Technology, it will continue to be "business as usual".

The news came as part of the company's announcement of financial results for the first fiscal quarter, ended June 27. IDT reported net income of $US8.5 million for the quarter ($0.09 per share) on revenue of $154 million.

However, the company reported that first-quarter microprocessor sales declined from the previous quarter, primarily as a result of "significantly lower sales" of its WinChip x86 processors.

IDT plans to license or sell its WinChip technology, as well as assets of its Centaur Design chip subsidiary in Austin, Texas, by the end of the current fiscal quarter.

The subsidiary's ability to make money in the highly competitive Intel clone marketplace has not met IDT's expectations, said IDT CEO Len Perham in a statement last week. IDT will continue to focus on the telecommunications market, Perham said.

Intel has made it difficult for any of its competitors in the microprocessor market to make headway, and this is reflected in investor interest. According to a report written in May by Michael Slater, founder and principal analyst at research company MicroDesign Resources (http://www.mdronline.com), Intel shares had an average selling price in 1998 of $227, compared to IDT's $30. Intel's PC-processor revenue for the fourth quarter of last year was $5.2 billion, compared to Cyrix's $75 million and IDT's "paltry" $7 million, according to Slater.

Legend's Product manager, Alex Dzunko, said the WinChip part of IDT is on the market and the company is in negotiation with possible purchasers. "We expect some news on the sale by the end of September, and we've been advised that our master distributor contract will be honoured and carried through," Dzunko said. It is understood the WinChip business is to be sold as a going concern. So for the Australian distributor, at least, the announcement by IDT could simply mean a change of brand name.


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