Intel Expected to Make Digital TV Chips
Wednesday December 17, 2:49 pm ET
By Daniel Sorid
SAN FRANCISCO (Reuters) - Intel wants to get inside your television.
The world's largest microchip maker will soon unveil plans to make chips for digital televisions, opening a fast-growing market to a company that dominates the computer chip business, an industry executive familiar with the plans said on Wednesday.
The entrance of Santa Clara, California-based Intel Corp. (NasdaqNM:INTC - News) would pose a serious threat to established consumer electronics companies in Europe and Japan, such as Philips (PHGAS)(NYSE:PHG - News) and Sony Corp (Tokyo:6758.T - News). as well as emerging players such as Texas Instruments Inc. (NYSE:TXN - News), analysts said.
Chris Chinnock, senior researcher at Insight Media, which publishes an electronics display newsletter, said the entrance would punctuate a clash in the television market between consumer electronics companies -- which have enjoyed relatively high margins and slower product turnover cycles -- and computer companies, which operate on razor thin margins and regular product updates.
PC makers such as Gateway Inc. (NYSE:GTW - News) and Dell Inc. (NasdaqNM:DELL - News) have already shaken up television sales with lower-cost liquid crystal-based sets, he said.
"By Intel entering this space, you've got a major PC company kind of putting a big exclamation point on this trend," Chinnock said. "If they're willing to pay to play, and they play to win, watch out."
Details of Intel's plans are expected to emerge next month at the Consumer Electronics Show in Las Vegas, during a speech by Intel President and Chief Operating Officer Paul Otellini.
Intel spokesman Tom Beermann declined to comment on the company's plans, which were first reported in Wednesday's edition of The New York Times.
Intel's efforts to branch out of its core computer chip business have failed before, however, and electronics giants would likely vigorously fight any attempts by Intel to encroach on highly profitable territory.
"They've got to prove they can mass produce this at the price points, the quality, time frame and volumes that they need to operate in the consumer electronics environment," said Chinnock.
Intel is known for spending billions on research into how to make high-performance chips at low cost, an effort that has given it an upper hand in the PC market. Cell phone makers, so far, however, have been able to fend off Intel's moves to roll over that market.
NEW TECHNOLOGIES DRIVE DOWN TV PRICES
Many shoppers are already familiar with ultrathin plasma TV sets, which cost several thousands of dollars. Novel technologies based on microchip technology are emerging that could offer similarly thin-screened TVs at even lower prices.
Intel is exploring a technology called liquid crystal on silicon, said Richard Doherty, research director of technology market research firm Envisioneering Group. The technology is a hybrid between the more expensive silicon microchips and liquid crystal displays.
TV sets based on liquid crystal on silicon, or LCoS, are already produced by Philips, and about 20 other companies around the world are working on building the small display panels based on LCoS, said Chinnock.
Texas Instruments sells what it calls digital light processors, a novel microchip that holds more than a million tiny mirrors that reflect light in particular patterns. Televisions based on DLP technology are sold by Gateway Inc. (NYSE:GTW - News), Korea's Samsung Electronics (005930.K), and others.
Liquid crystal on silicon, digital light processors, and other emerging technologies could lead to 50-inch television sets that cost $1,000, said Richard Doherty, research director of technology market research firm Envisioneering Group.
