Intel sees of Cyrix

Intel sees of Cyrix
Cyrix pulls out of the PC microprocessor market to concentrate on embedded solutions for information appliances. National CEO Brian Halla’s head-to-head strategy with Intel lies in ruins. David Manners reports on the end of a dream It’s a sad end to the Cyrix saga – but just another in a long list of microprocessors which have tried, and failed, to beat Intel in the general purpose computer market. There was the Zilog 8000, the Motorola 68000, the TI 9900, the National 33000 and the AMD29000. There were MIPS and SPARC, PowerPC and Alpha, the Transputer and HyperStone. All were billed as general purpose computer engines in their day, and all of them bit the dust and retreated to the also-ran status of the embedded market. Cyrix had some significant advantages when it was set up in 1988. It was backed by Sevin-Rosen whose chairman, L.J. Sevin, had, in the days when he was running Dallas-based memory and microprocessor company Mostek, cut broad fab licence deals with Intel’s founding president Bob Noyce. It looked as though a microprocessor made in an Intel-licensed fab – so long as it didn’t infringe Intel patents – would be immune from intellectual property lawsuits. So Mostek’s old fab in Dallas held one of the two keys adding legitimacy to an x86 clone. The second key was to produce a ‘clean-room’ microprocessor design: one that had the functionality of an x86 but was designed without any knowledge or reference to x86 circuitry. With these two – the Mostek fab and a ‘clean-room’ design – it would be theoretically possible to make a legal x86 microprocessor. But putting theory into practice proved difficult. Cyrix’s problem was volume. It could never get enough chips made. Cannily, the new owners of the Mostek fab, STMicroelectronics (ST), insisted on keeping one Cyrix chip for every chip they produced for Cyrix. That meant Cyrix never had control of its prices – ST could always undercut it in the market. So Cyrix never made enough profit to build its own factory and take control of its manufacturing. Although Cyrix used another Intel-licensed fab – IBM – it still was subject to one-for-one deals. The obvious answer – to go to an Asian foundry – was debarred because none had an Intel licence. So Cyrix withered on the vine and Sevin-Rosen were lucky to get $500m when they sold it to National in 1997. National took a lot of flak for spending half its R&D budget on Cyrix at the expense of its highly profitable analogue business which contributed 70 per cent of the company’s sales. Now National has said it will exit the PC microprocessor business, and will sell a majority interest in the factory that has been developed to manufacture PC microprocessors – at South Portland, Maine – with the loss of 300 jobs. “We will immediately cease slugging it out in the PC processor market, which has been dragging down our financial performance for several quarters,” said Brian Halla, chairman, president and CEO of National. Gross margins are now expected to return to the mid-40s per cent and operating expenses are expected to drop 20 per cent. National’s shares surged 21 per cent on the news and a dream died.


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