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Intel Changes Course on Desktop, Server Chips

UPDATE: Intel confirmed that it is canceling two projects as part of a radical reshaping of its Pentium and Xeon lineups.

The Santa Clara, Calif.-based chip making giant said it would no longer be developing its Pentium "Tejas" and its similarly built Xeon "Jayhawk." Both processors are based on single core architecture.

Intel said it would now move forward on its plans to migrate most, if not all, of its processors to dual core models by 2005. Engineers working on both chips have already been reassigned.

Already, Intel has announced plans to shift production of its high-end Itanium processors to dual core by 2005. Intel spokesperson Howard High told internetnews.com that the company is currently evaluating the rest of its high-volume Xeon processor line to see where it can make changes.

"This does not apply to all Xeon processors such as the low-power chips, but it is good to be able to keep our options open," High said.

High said the shift is just a natural evolution of its Hyper-Threading technology, but with greater performance because now it involves two full processor cores running dual threads and not just sharing one core. The timing is significant, High added, as computer manufacturers were gearing up to put the Tejas and Jayhawk designs in their products.

"The really interesting part of this is that it also applies to the mobile market. Intel will continue to use NetBurst for the dual core desktop chip and will use a dual core Pentium M core for notebooks," Kevin Krewell, senior analyst with In-Stat/MDR told internetnews.com.

Intel may have also made the switch because it reportedly was having thermal problems with its future single core designs and Tejas might not have scaled well. Intel recently reworked its processor numbering scheme, which is intended to wean customers off gigahertz as a proxy for performance.

"In general, temperature and power are two increasingly big chip design issues and Intel's current Pentium IV is already quite far out on the power density curve," Gordon Haff, senior analyst and IT advisor at Illuminata. "So whether or not Intel was having any specific 'problems', it was certainly facing major engineering challenges. Could it have overcome them? Most likely. But, because Intel had developed confidence that dual-core was a viable near-term alternative even for the desktop, it decided to accelerate its shift in that direction instead."

The chipmaking giant said it had finished contacting all of its partners and OEMs late Thursday. High said that there should be very little need for PC manufacturers to change their designs to accommodate the new Intel chips. Haff said the impact on the marketplace is small.

I don't see this move as being overly influenced by AMD, though certainly Intel may well see this as an opportunity to change the playing field to its advantage. AMD can play the same game - and doubtless will - but Intel has more resources and capital. It's unclear what the near-term price effects will be.

As for the PC makers, HP, IBM, and Gateway are expected to support Intel's change in strategy. In the case of Dell , a spokesman for the company told internetnews.com that Intel's decision to drop single core designs would not be the tipping point to force the 100 percent Intel shop to adopt AMD chips.

"While If AMD was really to have sustainable pricing advantages over Intel in at least some categories, that would certainly increase the pressure on Dell to adopt AMD. But Dell obviously doesn't think it's there yet, at least given the prices it pays for processors," Illuminata analyst Haff said.

Tejas and Jayhawk also signified Intel's second generation of single core chips built using the 90-nanometer (nm) process. The company is currently shipping Pentium "Prescott" chips into the marketplace.

Earlier this week, company CTO Pat Gelsinger said Intel is still very committed to shrinking its chip designs from its current 1.3-micron process all the way down to 45-nm. The executive also told internetnews.com that the company is always looking at alternative architectures.