Intel Moves to Push Pentium 4 Into the Mainstream

By Kevin Krewell

Intel faces several key challenges in the desktop PC processor market over the next few years beginning with the mainstreaming of the Pentium 4 architecture in 2001 that will make the Pentium III die obsolete by the first quarter of 2002. The company took a giant step in that direction with a surprise price cutting announcement April 23 that slashed the tab on Pentium 4 processors up to 51% and introduced the 1.7 GHz Pentium 4 at $352.

This radical pricing move was aimed at stimulating demand in a weak economy and hastening the Pentium III to Pentium 4 transition. As a result, Intel’s desktop processor average selling price (ASP) should deteriorate this year, then stabilize in 2002 on the strength of the Pentium 4, which will allow the company to maintain its performance lead over its only real rival, AMD. Intel will compensate for lower ASPs by cutting manufacturing costs.

As Moore’s Law continues to hold sway in the microprocessor industry, Intel should begin shipping Pentium 4 processors that clock in at a whopping 4.6 GHz by the end of 2003. The company will reach that mark by using process shrinks and the ability of the Pentium 4 microarchitecture to scale in frequency.

The Pentium 4 (code-named Willamette) is a major step forward for Intel because it is a completely new microarchitecture design. Pentium 4, the company’s seventh processor generation, represents a more challenging upgrade then Pentium III, which was a simple derivative of the Pentium II.

Pentium 4 first appeared in high-end PCs in the fourth quarter of 2000 at speeds up to 1.5 GHz. Due to many new features added to increase performance, Pentium 4 has 42 million transistors compared with 26 million for Pentium III. Although Intel made some trade-offs in the Pentium 4 design that impact performance, it expects higher clock rates combined with low cache latencies, greater system memory bandwidth and SSE2 will allow the chip to outperform AMD’s Athlon on future media-rich applications.

Intel wants the Pentium 4 to take over the performance PC segment in 2001, forcing the Pentium III out of that area by early 2002. The company is set to boost the Pentium 4’s clock speed to 2 Ghz in the third quarter. Further improvements to Pentium 4 will come in the new 0.13-micron chip known as Northwood.

The 0.13-micron process will enable much higher clock speeds, beginning at over 2 GHz, when it first appears in the fourth quarter this year. By the second half of 2002, Northwood will reach 3 GHz. The technology should cross the 4 Ghz threshold in the first half of 2003.

While the microprocessor path is on track, a major controversy has erupted over the choice of DRAM for future systems. Intel endorsed Rambus’s Direct RDRAM over SDRAM, due to its greater bandwidth—1.6 GB/s per channel, twice the bandwidth of a 64-bit PC100 memory system—and lower pin count. Intel has spent more than three years building support for the SDRAM to RDRAM transition that was expected to occur in 2000.

But DRAM makers, system makers, and third-party chipset vendors have all resisted this move due to the costs of switching to the new design and the high royalties demanded by Rambus. Delays and bugs in Intel’s 820—its first RDRAM chipset—have added fuel to the fire. Intel continues to insist that Rambus is the way of the future—at least in the performance desktop segment. If RDRAM’s bandwidth advantage turns into a deliverable and measurable improvement in application performance, OEMs will probably accept RDRAM. As Pentium 4 volumes increase, so will RDRAM volumes, and prices should approach parity with SDRAM prices by the end of 2002.

In short, the Pentium III to Pentium 4 shift is Intel’s most difficult transition since the Pentium/MMX to Pentium II migration in 1997. Like Pentium II, Pentium 4 requires new motherboards and new chipsets. In addition, Pentium 4 is a much larger die than its predecessor, requiring careful management of pricing and wafer starts.

Kevin Krewell is a senior analyst with Cahners MicroDesign Resources (MDR). He can be reached at kkrewell@mdr.cahners.com.