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IDT bows out of Intel chip clone business

IDT bows out of Intel chip clone business

Semiconductor provider IDT last week announced its withdrawal from the x86 microprocessor market, removing one of industry giant Intel's competitors from the playing field. But according to IDT's Australian master distributor Legend Performance Technology, it will be "business as usual".

The news came as part of the company's announcement of financial results for 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 yesterday. 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 MicroDesign Resources (http://www.mdronline.com) market research company, 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 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.


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