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Friday, June 18, 2004 - Page updated at 12:00 A.M.
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Upgraded Intel chips enhance graphics and sound

By Ian King and Jason Kelly
Bloomberg News

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Intel unveiled a set of chips it hopes will stem slowing sales growth by wooing computer buyers with advanced graphics and theater-quality sound.

The chips, dubbed Grantsdale, are the first major chipset upgrade in 12 years for the world's largest semiconductor maker. It will be sold with the fastest Pentium processor, Intel Vice President William Siu said at a product demonstration at the Ritz-Carlton Hotel in San Francisco.

Intel, whose integrated circuits run more than 80 percent of the world's PCs, is releasing chips such as Grantsdale to enhance the semiconductors that work with its main processor. Sharper graphics, lower power use and wireless Internet connections are more important to consumers and businesses than clock speed, the rate that electrical pulses move on a chip, investors said.

"They have to innovate," said John Waterman, chief investment officer at Rittenhouse Asset Management, which has $12 billion under management, including Intel shares. "I don't think the consumer is going to buy a PC every year because Intel has a new faster chip."

Intel's Siu demonstrated computers that will show multiple high-definition video pictures on 60-inch wide screens and play movie-theater-quality audio on multiple speakers without the addition of "hundreds of dollars of cards."

"This is the most ambitious makeover in the PC platform for over a decade," he said as he led 75 reporters and analysts through a series of suites on the top floor of the hotel in the city's Nob Hill neighborhood. "We've taken a different path to show the benefits of how the technology will be used and the benefits it will give."

The Grantsdale introduction comes a year after Intel unveiled Centrino, a chipset that enables wireless Internet connections and longer battery life in notebook computers. It has a slower clock speed than desktop models.

Centrino's success, in part, led Intel in March to change the way it names its products to downplay clock speed.

Under Chief Executive Craig Barrett, 64, the pace at which Intel has brought faster processors to market has slowed. Today's event included the introduction of its fastest Pentium 4 desktop processor, a 3.6 gigahertz model that can count at 3.6 billion cycles per second.

It took Intel 14 months, from August 2001 to November 2002, to increase the speed of its processors to 3 gigahertz from 2 gigahertz. It's taken the company a further 19 months to add another 600 megahertz.

In February, Intel released four new versions of its Pentium 4 processor, none of which were faster than its predecessor.
 
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At the same time, Intel has added more entertainment functions into its chips, analysts said.

"People don't use computers just to compute anymore, and this is a sort of liberation," said David Wu, an analyst with Wedbush Morgan Securities in Los Angeles who rates the shares "buy" and said he doesn't own them. "It's a watershed event in that they're repositioning the PC for a different world that's not driven by the CPU."

Wu estimated Intel gets "a couple billion" a year in sales from its chipset division. Intel doesn't disclose how much revenue comes from chipsets. It has about 60 percent of the market for chipsets, according to IDC analyst Shane Rau. Its 2003 sales totaled $30.1 billion.

The new chipset will be the first to incorporate sound-processing functions used in movie theaters. The so-called "7.1 surround sound" divides movie sound into different elements to make listeners feel they are in the action rather than in front of speakers. It's now only available through separate amplifiers or expensive add-in sound cards.

Grantsdale includes a new graphics processor that will let computer gamers run three-dimensional games on a PC without having to by a separate graphics processor card.

Copyright © 2004 The Seattle Times Company

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