24th > September > 1999 Archive

The Register breaking news

Intel chips away at networking

Intel is dipping into petty cash to buy another building block for the Internet Economy. It is taking on the telecoms components and products division of Stanford Telecommunications, a company currently being acquired by Newbridge Networks. Stanford makes silicon components for "head-end equipment used by cable companies and broadband wireless service providers as well as customer premise equipment (CPE) such as cable modems and set-top boxes". The transaction (on undisclosed terms) also allows "Newbridge to retain access to the silicon components required for the Wireless Broadband Products group". In other words, Newbridge is to become an OEM for Chipzilla silicon. To date, Intel has splashed out more than $3 billion on ten acquisitions in the networking sector, and two more(Olicom's R&D team and the Stanford buy) are pending. Acquisitions span R&D teams, networking equipment, silicon and software. Just goes to show how seriously the company is taking networking, John Miner, head of Intel's new Communications Products Group, says. Intel is not exactly in Netzilla league yet. And it's a wee bit difficult to work out just how well the company is doing as a Building Block Supplier For The Internet Economy -- as it declines to break out figures by product group. But when it comes to strategy, Intel is more than willing to talk the talk. Yesterday, Miner ran some UK rags, including The Register through Intel's thinking on networking. First up, Intel prefers to think in terms of communications industry and computer industry, each of which produces $200 billion or so in annual revenues worldwide. Fuelled by the Internet, these markets are merging into one enormous opportunity. And Intel likes what it sees. Miner cites estimates that only four per cent of the servers needed for the Net infrastructure of 2005 have shipped. On previous form, Intel could anticipate more than 80 per cent of this business, and possibly more than 90 per cent when IA-64 boxes kick in (our calculations, not Miner's). But the company's ambitions extend much further than that -- it wants to become the OEM for the networking world. The convergence of voice and data round a single IP telephony network is a strategic inflection point (a concept popularised by Andy Grove in his book Only the paranoid survive) for the comms industry, Miner argues. And this gives Intel its chance to punch its way into the sector. As networks unify around the agreed IP standard, network providers must slug it out on the basis of services. This fits nicely into Intel's bag. Standardisation enables siliconisation enables commoditisation. So Intel will be seeking out a hell of a lot more Newbridge style Internet building block supplier deals. Intel also reckons that IP services -– or some of them, at any rate -– play to the company's strengths. This is where the $500 million-plus investment in server farms, announced in June, comes in -- two Intel farms are already up and running Stateside and a third is slated for Europe (London, we guess) in the next few months. Intel wants to sell this capacity to ISPs and small and medium businesses, because that's where it thinks it can make the most impact. Intel also want to fill the racks of the world's ISPs with its servers, shock, horror. This is where channel conflict could rear its ugly head. One could easily work up a scenario where, say, Intel found itself competing with IBM for a Tier 1 ISP contract to supply a couple of thousand servers. But hey, that's a conflict worth fighting. Outside the ISP environment, there won't be any Intel Outside-branded servers, Miner says. But there will continue to be Intel-branded networking equipment, software, and services. The logic of this is that Intel will move upmarket at some point. You would have thought the big networking equipment suppliers -- Cisco (the real Netzilla), Lucent, Nortel et al -- would be just a little suspicious of their friendly silicon manufacturer. You would have thought. ®
Drew Cullen, 24 Sep 1999
The Register breaking news

MS spins off Expedia – what do you want to IPO today?

Microsoft is spinning off its loss-making Expedia travel service, and has filed a registration statement with the Securities and Exchange Commission for an IPO. This may be the first of a number of such offerings, with Car Point having been tipped as another candidate, following a hint by president Steve Ballmer on Monday. This is not the first divestiture that Microsoft has made: in July, the loss-making Sidewalk was sold to TicketMaster-City Search as "a win-win deal", as Microsoft put it. Microsoft had failed miserably with Sidewalk, so the sale was seen as a stop-loss. The IPO is a far cry from the discussion of a tracking stock that had arisen a month or so ago for all Microsoft's loss-making Internet operations. Ballmer was known not to be keen on the idea, since it had little to do with Microsoft's principal business, and he feared it would be interpreted as financial engineering. This may be one of the first moves in which Richard Belluzzo (ex-SGI CEO, ex-HP) has played a role since he was appointed vp of the consumer and commerce group earlier this month, although there was no statement yesterday by Belluzzo about the intended offer. This tends to suggest it was not his idea, although he may have been allowed to put his rubber stamp on it. In FY 1999 (which ended in June), Expedia lost $19.6 million on revenue of $38.7 million, and in FY 1998, there was a $29.5 million loss on just $13.8 million of revenue. Previously the scale of the losses had not been disclosed. Microsoft is creating two classes of shares for Expedia, with "A" shares having one vote, and "B" shares, which Microsoft will retain, having 10 votes, ensuring control. We can determine from the SEC filing statement that Microsoft is seeking to raise around $75 million, because of the size of the registration fee for the offering. This will probably translate into Microsoft retaining about 80 per cent of Expedia. The IPO price is not yet known. Expedia will have to fork out to Microsoft a scale fee starting at $2 million for the first fiscal year (2000) for certain Microsoft perks, like premium placement on the soon-to-be-regurgitated, third-try MSN.COM Website. Microsoft has agreed not to compete with Expedia for three years, but is reserving its options thereafter. The CEO will be Richard Barton, who developed Expedia as a Microsoft employee, with CFO Greg Maffei as Chairman. Microsoft will hope to be able to attract experienced staff, but there is at the moment uncertainty as to whether it would be a good thing for Microsoft staff to move to Expedia as it is not yet known if they would have to surrender their Microsoft options. On the other hand, Expedia would be better positioned to attract new staff and to offer them Expedia shares on a different basis from that used in Microsoft. Microsoft hopes to be able to form new partnerships with travel and service operators using its muscle. The news was not well received by the Street, with MSFT being marked down $4.88 to $91.19, although Ballmer's comment that Microsoft shares and other tech stocks were over-priced did not help, and probably contributed to a sharp decline of NASDAQ. There's a curious side-issue as well. The first wire report about the deal came from Bridge, some 47 minutes before Microsoft's official announcement was published. How strange that the co-author of the brief report was Jennifer Edstrom, the estranged daughter of Pam Edstrom, dubbed a PR guru, "Gates' keeper", and who is a founder of Waggener Edstrom, Microsoft's principal PR firm since 1982. The daughter is the co-author of Barbarians led by Bill Gates [Henry Holt & Co, New York], which was not well-received and which in some ways was an act of revenge by its authors. Edstrom mère had been concerned that her journalist daughter might spill the beans from inside knowledge about Microsoft in the book, but in the event, it revealed very little. Waggener Edstrom played no role in the Expedia announcement as Edelman handled the press relations, as it usually does for corporate announcements. It is unlikely that Edstrom Jr was given a hint by a mother frustrated that WE was not handling the announcement, because WE itself had proposed that other PR firms be used. Nonetheless, it is curious, as Microsoft was obliged not to leak this news as it was subject to SEC rules - and Microsoft is already under investigation, again, by that very body. ®
Graham Lea, 24 Sep 1999
The Register breaking news

String him up! Market applauds Ballmer stock intervention

Microsoft president and ace publicist Steve Ballmer knocked five per cent of his own share price and made a substantial dent in the Dow Jones yesterday by describing the overvaluation of technology stocks as absurd. Oops. Speaking to an audience of journalists (double oops) Ballmer said that he'd put "our own company and others in that [overvalued] category." This vote of confidence was no doubt welcome to his colleagues elsewhere who were announcing that Microsoft's online travel service, Expedia, was to IPO. The market seems to have reacted warmly to Ballmer's helpful interventions. According to the WSJ's Smartmoney, "The message boards reacted furiously. Postings on Raging Bull's MSFT message board were titled 'hang this man' and 'what the hell is Steve Ballmer doing?' A Yahoo! (YHOO) posting: 'If Gates doesn't drag him out back and kick the s--- out of him, I will.'" Triple oops. ®
John Lettice, 24 Sep 1999
The Register breaking news

Torvalds sees Windows decline, rise of Linux appliance

While Steve Ballmer was causing stock prices to crash in the USA (String him up!), Linus Torvalds seems to have been coincidentally making related predictions in Helsinki. Software prices, he said, will start to fall drastically, with the crunch coming in around three years. Torvalds was talking to the determined Reuters reporter who induced him to say nothing much about Transmeta earlier in the day (See story), and although he doesn't seem to have said a great deal in the interview either, he tossed in a couple of intriguing hints as to how he sees the future. The 'software price crash in three years' prediction, for example, is based on a decline in the need for constant upgrades. It would have been useful if he could have elaborated on this, but this was most likely a dig at Microsoft, Intel and the PC companies. Wintel especially has a need to keep the upgrades rolling fast in order to keep the revenue rolling, and they're constantly searching (Intel blatantly so) for new applications that can soak up the excess horsepower they need to sell to their customers. It's no coincidence that although Torvalds also thinks that Linux could break Windows' dominance on the desktop, he suggests that it would be best to review the situation again in three years time. That implies that he sees the growth of Linux on the desktop as taking place in parallel to a decline in the effectiveness of the Wintel upgrade/sales model. Which is a reasonable point of view, but he's more concerned with getting Linux onto smaller "purpose-built devices" such as phones and PDAs, and envisages multiple devices going into the home. So he's obviously keen on developing Linux in the embedded space, and making it more appropriate for a broad range of cheap, single- or limited-purpose appliances. The action, he suggests, will shift away from the desktop anyway, and the implication is that Windows will be the loser. ®
John Lettice, 24 Sep 1999
The Register breaking news

LinuxOne to IPO – but with what, exactly?

Updated Following the trend led by Red Hat, Linux distributor LinuxOne yesterday filed its plan to make in an initial public offering of three million shares. Sounds straightforward, but this is one IPO that appears to be anything but straightforward. The company's filing with the US Securities and Exchange Commission claims LinuxOne -- a new player in the open source OS distribution business -- will use the money it hopes to raise from the IPO for software development, geographic expansion and -- we note -- Web site development. Could this be because the company doesn't actually have a Web site? Indeed, it doesn't. All the www.linuxone.com site contains right now is an ass-licking statement crediting Transmeta for the page design: all the site says is "This web page is not here yet!", just like Transmeta's has been doing for months now. Original, no? And following the logic of the company's Web site statement, could the whole IPO gig be happening because the company... er... doesn't have any money yet either? LinuxOne's filing with the SEC apparently says the company has been shipping its Linux distribution since "September 1999". Clue: September 1999 isn't over yet... If anyone out there has a copy, we'd love to hear from you. So could it be, as we suspect it might, that LinuxOne is little more than some guy keen to find some start-up capital by IPOing a company that doesn't actually have anything to IPO? We'd never suggest this is some kind of scam -- surely the SEC would never let that one through? -- but it does seem likely that that LinuxOne isn't -- at least not yet -- quite the investment opportunity that it might seem. Update Since we posted this story, we've received numerous emails from Register readers letting us know that LinuxOne's Web site is at linuxone.net, not linuxone.com. And indeed, that is LinuxOne's site, where would-be users of the company's LinuxOpen "commercial" Linux distribution can sign up for a beta test programme for $9.95 a pop. And LinuxOne is not offering its software for download (free or otherwise). Hmmm. LinuxOne describes itself in these words: "LinuxOne, One Stop for Linux, provides world-class quality UNIX (Linux) software targeted to the server, workstation and home environments. It is distinguished by the unchallenged availability of applications and platform support, ease of installation and use, support, and commitment to lead in the development of timely extensions that address the requirements of the market for new functionality. LinuxOne operating software provides stability, security, and usability for the end user. LinuxOne expects to become the highest rated supplier of Linux solutions based on packaging, support, and capability worldwide." Such claims are often inflated, but these seem rather more gas-filled than usual, not least because the company appears to only have been around since August, and doesn't appear to have actually released any software yet. ®
Tony Smith, 24 Sep 1999
The Register breaking news

Spammers sued by Microsoft

Microsoft is suing three businesses in the US that sold pirated software to thousands of people online via a mammoth spamming operation. The companies sent out 25 million emails worldwide, with legal firms and companies in the public sector among those duped into divulging credit card details online. The companies responsible have been named by Microsoft as Online Software Club of America, Asheville; NATM-NET, aka Networld, Phoenix; IWI LLC, doing business as: Online Software Club, Discount Software Club, Online Discount Software Club and Information Warehouse Inc., St. Louis. The source of the emails was largely untraceable. Elaborate schemes were used to hide the origins of the emails, which often appeared to come from Korea, Mexico, Israel or Italy. They requested payment and personal details from unsuspecting customers, and referred to Web sites which turned out to be temporary and quickly disappeared. In a spamming extravaganza last month the emails were even claiming that the company gave ten per cent of all its profits to children's charities. Microsoft got over 2000 complaints about the activities of the group before tracking them down. The software giant was this week warning Web users to beware of online companies with no physical 'street' address. It also advised that all spam should be forwarded to uce@ftc.gov to alert the Federal Trade Commission. According to the Business Software Alliance, there are an estimated 840,000 Web sites selling pirated software. ®
Linda Harrison, 24 Sep 1999
The Register breaking news

Dope dealers drive eBay potty

Pot heads who hoped to cash in on a trip of a lifetime after responding to an ad on eBay offering 500 pounds of marijuana have received a different kind of blow from the online auctioneers. Less than 24 hours after the ad was posted, officials closed down the offer but despite eBay's quick reactions bidding had reached $10 million for the haul. Although it's believed that the offer was yet another hoax, the auctioneers at eBay are no dopes and certainly can't be accused of making a hash of handling this incident. Michael van Swaaij, European VP of eBay told The Register today that the company will do everything it can to help the authorities track down the perpetrators and prosecute them. And he said there was a groundswell of opinion among the eBay community to stamp out the hoaxes that have plague the service recently. "We have a strong community and we're alerted by other eBay users when this kind of thing happens," said Swaaij. He predicted that the current craze for posting hoax items for sale would soon burn itself out. "Because eBay is so transparent and open it is the worst place to do something illegal because our members police their own community," he said While eBay will tolerate harmless hoaxers it is committed to stamping anything illegal such as the now famous kidney and baby selling incidents. Earlier this week it appears the British Royal Family was put up for sale. There is no news whether anyone was remotely interested in buying the Windsors. ®
Tim Richardson, 24 Sep 1999
The Register breaking news

Shareholders say ‘yes’ to S3, Diamond merger

The proposed merger between S3 and Diamond Multimedia will now go ahead after investors in both companies voted this week to support the deal. And with the deal effectively done and dusted, S3 revealed its post-merger structure. The company will split into four independent divisions. Multimedia will take charge of S3's 3D graphics acceleration technology and Diamond's audio products, and focus on consumer -- and presumably OEM -- markets. Diamond's high-end graphics products, most notably its FireGL 1, will form the core offerings of the new Professional Graphics subsidiary. Diamond's RioPort subsidiary will continue as a separate business unit operating in the digital music space. Interestingly, it will not take on the Rio digital music player -- that will fall into the Communications division's remit, which also includes Diamond's modem and home networking lines. Breaking S3's business down into separate business units, all in different geographical locations, suggests that S3 is ultimately planning to sell some of them off. Certainly, it's a darn sight easier to flog off, say, the Professional Graphics business, to be based in Germany, if it's a self-contained unit. It will also make simpler to spin off RioPort through an IPO. It's not known if S3 wants to divest itself of any of these units -- most likely it will see how the combined company develops before making any such moves, but whether it already has spin-off plans or not, it's ready for them structurally. Meanwhile, it's not yet clear whether the Diamond Multimedia brand will be retained in the medium term -- for now, it will have to be; there's too much kit out there in Diamond-branded boxes, and the combined operation is for now retaining Diamond's URL for its e-commerce efforts. ®
Tony Smith, 24 Sep 1999
The Register breaking news

DRAM prices go through roof

DRAM prices were reaching dizzy heights this morning following uncertainty caused by the Taiwanese earthquake, with 128MB DIMMs nudging £200. Dane-Elec was pricing 128MB modules (PC 100) at £195 plus VAT, and 64MB modules at £97. Yesterday the market saw the price of 128MB modules (PC 100) surge by up to 20 per cent, according to some systems builders. Quotes were as high as £198 plus VAT by late afternoon, from £169 at the start of the day, according to PC builder Carrera. There was a similar hike for 64MB DIMMs, rising from £80 to up to £99 plus VAT during the day's trading. Prices have doubled in one month, and quadrupled since July, when you could pick these modules up for around £45 and £22 respectively. And if only we had. Colin Collier, Carrera MD, yesterday afternoon said: "DRAM prices seem to be going up by the minute." Richard Goddard, MD of memory distributor GSI, told a similar story yesterday. "We were definitely seeing smaller quantities being sold in the late 190s [pounds] this afternoon." "We've had a small influx of orders, but next week is when the really busy period will start," he said. "The problem is actually pinning down the extent of how production has been affected by the earthquake. "Are people really going to buy PCs if there is an extra £200 stuck on the price?" And rumours of shortages were rife, with Goddard saying manufacturers in the Far East had warned of a $16 price hike on 128MB DIMMs over the weekend. But he said that Europe was largely not willing to take on these price rises, seeming to think that prices would stabilise or drop over the weekend. "But I'm not so sure about this," said Goddard. Alan Stanley, Dane-Elec general manager, confirmed that many orders throughout the industry were not being met in full. "At the moment, most people are limiting what they sell," said Stanley. Dane-Elec had been told that Taiwan would lose around two weeks' worth of manufacturing. "There's only one thing for certain at the moment," said Stanley. "Prices certainly aren't going to go down." ®
Linda Harrison, 24 Sep 1999
The Register breaking news

Ecommerce minister caught sitting on fence – shock

Britain's ecommerce minister Patricia Hewitt wants to cut the cost of Net access for consumers -- but it's not her priority. Instead she told a Net conference at the London School of Economics yesterday that sorting out the ecommerce bill was more important. "We have got to get the costs down," she said. "I will be pushing this forward with Oftel, but it's as least as important that we get the legal framework right," she said. A spokesman for the Department of Trade and Industry (DTI) explained that while the minister was committed to reducing the cost of Net access the government had no plans to force a price cut. Instead it was up to the marketplace to bring down the cost itself. This has been government policy for some time but it does beg the question, if it's up to the marketplace to decide why is the minister in talks with the regulator? ®
Tim Richardson, 24 Sep 1999
The Register breaking news

Novell unleashes NDS for everyone via free email system

Novell has quietly made its play to take directory services to the masses, opening up an NDS-based free email service at myrealbox.com yesterday. We don't of course need yet another free email service, but Novell is banking on NDS as the system's unique selling point. And if it succeeds, of course, it'll be one more step in the company's (so far rather promising-looking) campaign to make NDS the industry standard, and head off the impending challenge from Microsoft. Novell CEO Eric Schmidt talked a little about the new service last month at Citrix iForum. Yesterday's unveiling was of "a production site on the net where you as end user store your information and credentials." Note that this is a far bigger play than simply a free email service, because Schmidt is envisaging a future where credentials, bookmarks, address books and all sorts of other personal data (including desktop settings) are stored for you. So where today it's possible to just walk up to any device that has a browser and pick up your email, Novell's system will ultimately extend to giving you access to all of your stuff, from any device, anywhere. This is of course what NDS is intended to do in the corporate environment, so you could look at myrealbox.com as being the beginnings of NDS for the masses. "Directory-based technologies represent the most high level revolution," said Schmidt. Finally we have the underlying infrastructure to make all this happen." In his presentation, Schmidt also happened to slip in a giant signpost to somewhere else related Novell was going. He made a point of referring to the forthcoming "high capacity digital wireless system taking off under the GSM umbrella," and this of course is Europe's UMTS, 3G broadband wireless. Wireless is a logical place for Novell to be going, as it uses NDS to barrel down a road that abolishes both desktops and personal hardware (if you can get the settings remotely, any hardware does). Users of next generation wireless communicators and smartphones could use myrealbox.com or equivalent for this kind of access, but it would also be logical for Novell to pitch NDS to the network providers, who could then offer more tailored systems to their customers. If Eric has heard of UMTS and knows enough to be scathing about US 3G efforts (which he does), Novell is going to do this - trust us. But what about myrealbox.com? It offers access from anywhere, from a browser and a range of email clients, and you can use it to pick up mail from multiple email accounts. That's handy for the user, but vitally important for Novell, because for the directory model to work users have to be induced to start merging in their settings, bookmarks etc from the multiple computers and devices they're currently stored on. It also promises no advertising (Novell has bigger fish to fry here) and no spam (tricky, but we'll see). One sales point Novell doesn't make, but which occurs to The Register (shame on us) is the trust/security aspect. When we think of the possibility of, say, Microsoft, storing our settings, personal data and so on the words "hot needles" and "eyes" spring to mind. But the good, god-fearing folks from Utah? Even though it's now led by some geek from Sun, Novell still has lots of cred in this department. ®
John Lettice, 24 Sep 1999
Intel headquarters, Santa Clara

i820 derailed as Intel goes Rambust

Intel has delayed shipment of its i820 chipset due to problems with Rambus, leaving PC builders dreaming of a Whitney Christmas. The chip giant today told systems builders that it would not start shipping the i820 on Monday – the planned launch date. The i820 chipset – called "Camino" - is needed for the use of Rambus memory, which also suffered a set back to its launch date earlier this year. No new shipping date was given for the i820 chipset, but one source was told by Intel that it could be a matter of months. This means that Intel's first range of Camino-ready products – codenamed CapeCod – will also be delayed. Earlier this week it was reported that Intel had acknowledged a problem with the Rambus memory technology. According to CNET, the motherboards have three memory slots, but Intel is now saying there should only be two. This third unused slot could lead to data being lost in transit between memory and the main processor. Intel said it was aware of the comments about the chipset, but was as yet unable to comment on whether the launch date would go ahead as planned. ®
Linda Harrison, 24 Sep 1999
The Register breaking news

It's Time to give away software

Time Computers is coming to the aid of impoverished schools in a £35 million IT give-away. The "Free Software for Schools" bonanza is due to kick off on Saturday, when parents and kids can start collecting tokens for Tiny kit from The Times newspaper. Two tokens will appear each day - one for school and one for home - until next January. One thousand tokens will net around £500 of software. Tokens will also be available from WHSmith and John Menzies, where every £5 spent will earn five tokens. And there will be several incentive schemes - those registering before 8 October will get 350 extra points, and parents who sign up for NetLine, Times' ISP, will get another 50. The UK PC builder has teamed up with The Times and WHSmith for the offer, which will run until the end of January 2000. As well as software, schools can apply for hardware, though the number of tokens needed for a PC was not known at Time's PR office this afternoon. A truckload, presumably. However, the biggest push involves the software. "It's the software that is missing from the schools at the moment. They have the hardware, but can't learn from it without the software," said a Time representative. Around 10,000 schools have signed up for the scheme so far. David Blunkett, secretary of state for education and employment, said: "Free Software for Schools is an excellent example of a private sector initiative that benefits the public sector. "Quality software provides an invaluable learning tool across the curriculum and complements government investment in IT for schools." ®
Linda Harrison, 24 Sep 1999
The Register breaking news

Graphics cards, Intel chipsets hit badly in quake aftershock

Manufacturers of a wide range of computer and electronics products will be hit by a shortage of key components following Tuesday's earthquake, say analysts and industry sources in Taipei. "Some companies simply can't produce right now, for example the fabs (chip makers) in Hsinchu," said Paul Meyer of Credit Lyonnais Securities Asia, "Other companies aren't willing to produce until they get a steady feed of power.... So you may get a notebook company that's ready to ship a notebook, but they're waiting for a tiny plastic component." Chip makers in Hsinchu's science park hope to be back in operation next week, but say uncertainties over power prevent them giving a firm date. The world's two largest contract chip makers, Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp.(UMC) are near standstill, along with most of their competitors. Two small memory chip makers, Nanya Technology, and Powerchip Semiconductor, which have independent power suppliers, say they have restarted production. "TSMC and UMC have got a big problem," an executive at a Taipei-based computer products maker said, "the reason is not only the power supply issue, but also they have some mechanical issues over there. So the recovery will take a long time." More than three quarters of the world's graphics chips are made at UMC and TSMC. "There's definitely going to be a components shortage for the industry," said Marx Li, marketing manager at graphics card maker, Leadtek Research, "our suppliers have already told us that in the short term there will be supply problems." "Fortunately, because the fourth quarter is high season, " Li said, "we have 30 days to 45 days inventory of chips. So in the short term we're still okay, but I don't know about the middle of November." Leadtek's factories in Taipei County are currently idle, Li said, but would probably restart on Monday. The company's surface mount technology (SMT)lines (where chips and other components are mounted onto printed circuit boards), which may have been shaken out of alignment during the quake, need to be recalibrated. The SMT machinery also needs a stable power supply to run, Li said End user prices for graphics cards and other products will probably rise, said Mr. Li, but he was unable to estimate the size of the increase. "That depends on the new prices quoted by our supplier." Graphics chip suppliers have told Leadtek that delivery will be delayed, and prices will be increased, Li said. "They don't know enough about the damage at TSMC and UMC, so they cannot make a final decision yet." There are no problems with production lines at major motherboard and notebook computer maker Asustek, said a company representative, but supply of some components, in particular, chipsets is a potential problem. Motherboard and PC makers may find it harder to get chipsets, said Don Floyd, of Credit Lyonnais Securities Asia in Taipei. Independent chipset vendors like VIA Technologies, Silicon Integrated Systems, and Acer Labs source almost all their chips from companies in Hsinchu, and may have no second source, he said. There is also an continuing shortage of Intel chipsets, such as the 440BX, and Intel's new 810 chipset has proved unpopular with motherboard and system designers. The government's National Science Council has intervened with the state-owned power company on behalf of chip makers. Taipower will be providing 80 to 85 per cent of power requirements by Monday, and possibly as soon as Saturday, said representatives of TSMC and UMC. "It's very hard for us to precisely assess damage from the earthquake," a TSMC spokesman said on Thursday evening, "at least we need to wait for power to come back so we can allow the whole team to start to check the production line." "Some of the wafers in the line... you can see by the broken mould that they should be scrapped.", said TSMC's spokesman, "However, lots of wafers still look good, but we should take a lot of time, equipment and resources to check if they can be reworked or not." The TSMC representative said that it was quite likely Hsinchu's chip plants could return to normal within two or three days, but in the worst case, nine or 10 days would be needed. ®
Simon Burns, 24 Sep 1999