Intel To Introduce Cheaper, Faster Chips

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July 29, 1998 (7:14 AM EDT)

Intel said it plans next month to introduce a 450-MHz Pentium II chip for desktop computers, overtaking the existing top-of-the-line 400-MHz PII microprocessor. Although the new chip is expected to appear in business computers, Intel timed its introduction so the chips can get into consumer PCs for the back-to-school and holiday shopping seasons, sources said.

The new chips are part of the Santa Clara, Calif., company's (company profile) strategy for carrying the Intel line forward through 1999. Intel said it also plans this month to ship more powerful Celeron chips for low-cost PCs and new high-end server and workstation processors in the Xeon line.

Dataquest analyst Nathan Brookwood said systems manufacturers may have difficulty selling PCs based on the 450-MHz Pentium II. Demand for the biggest and fastest PCs on mainstream corporate desktops is waning, he said.

"Until some application comes along and starts to tax the current machines, people won't be bugging their IS departments to get a new one," Brookwood said. "And that's a serious problem for [PC] vendors."

Multimedia and voice-recognition applications may prove to be the processor hogs vendors need to sell more powerful systems.

Intel also announced price cuts on existing chips. Pentium II prices were reduced between 18 percent and 31 percent. For example, the price of a 266-MHz PII was slashed 20 percent to $589. Pricing for Celeron chips were also cut. A 266-MHz chip dipped from $106 to $86, and a 300-MHz Celeron which was $159 now sells for $112.

The new Celeron chips will address the problem associated with the original chips introduced in April: the lack of a Level 2 cache made its performance poky in comparison to older Pentium MMX chips. The new chips, code-named "Mendocino," will run at 300 MHz and 333 MHz and come with an integrated 128 kilobytes of cache memory.

On the server front, Intel's plans include introducing a 450-MHz Xeon chip in September with 512 KB, 1 megabyte and 2 MB of secondary cache. Intel also plans to unveil a 500-MHz Xeon code-named "Tanner," with graphics based on Intel's new Katmai instruction set in the first quarter of 1999.

"They're offering a fairly rapid set of upgrades to the Xeon line," said Linley Gwennap, editor of the newsletter Microprocessor Report. "With the Xeon line, they will offer continual upgrades, unlike the Pentium Pro, which they brought out two years ago, and it just sat there."

Intel is also working on pushing down the size of the chips. All its Pentium II are now the newer, 0.25-micron Deschutes architecture, rather than the older, 0.35-micron Klamath design.

The smaller chips are faster and cheaper to make because more chips can be produced on each wafer, and they reduce power consumption and heat, Intel said.