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Could it be? A $500 PC?
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April 6, 1998: 12:17 p.m. ET
National Semi and other chipmakers look to take a chunk out of Intel
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NEW YORK (CNNfn) - National Semiconductor Corp. said Monday it will combine most of the chips used in personal computers onto a single chip, which could bring prices for new PCs below $500.
With the announcement, National Semiconductor became the latest chipmaker to try to make a dent in Intel Corp.'s market dominance.
National Semiconductor said the chip, which is due to ship in June 1999, would replace the dozen or more separate chips typically found in PCs. A single processor, the company said, will improve performance and lower costs for both computer manufacturers and consumers.
The chip will be built around technology developed by Cyrix Corp., which National Semiconductor acquired last November.
Shares of National Semiconductor (NSM) rose 1-5/16 to 21-9/16 in early trading.
National Semiconductor said the new chip will lead to other processors that will power a broad range of appliances.
"First the PC goes on a chip," said Brian Halla, National Semiconductor chief executive officer. "Next, the PC becomes a plug-in behind the dashboard of your car, behind a flat-panel display in your kitchen, or inside a set-top box. The PC disappears just the way electric motors are invisible in our lives."
Like other chipmakers, National Semiconductor is attempting to cut into Intel's (INTC) overwhelming market share. The prospect of a $500 PC is appealing. But with PC prices dropping steadily, $500 PCs may already be available by the time National Semiconductor's chip hits the market.
"The time frame is an issue," said Mona Eraiba, senior vice president of research at Gruntal & Co. "We don't know what the market will be like in June 1999."
Other chipmakers already have gotten into the act with low-cost alternatives to Intel's Pentium processor.
Cyrix (CYRX) developed the processor that Compaq Computer Corp. used for its first sub-$1,000 computer, which was introduced in February. Also in February, Advanced Micro Devices Inc. (AMD) signed a deal with IBM Corp. to increase production of AMD's K6 processor. AMD also is readying its K6 3D chip for release in June.
So far, however, no one has seriously threatened Intel's reign.
"It's virtually impossible to topple Intel," Eraiba said. "Every time someone arrives with a new product, Intel raises the bar. Everyone is vying for a crumb out of Intel's pie. If they all get just a few crumbs they'll be very happy." 
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