National Semiconductor is looking to topple chip giant Intel from its dominant slot after buying Cyrix for $536 million.
The stock-based deal will increase pressure on Intel by propelling National, a communications and consumer product chip maker with sales of over $2 billion, further into the x86 chip market. Because of its size, National will pose a more serious threat to Intel?s dominance in PC and server processors.
Joe D?Elia, a senior analyst at Dataquest UK, said: ?Cyrix had to do something soon because its partnership with IBM wasn?t working. Cyrix was clearly getting more frustrated with IBM and this deal makes a lot of sense.? Under the agreement, Cyrix designs chips at its Boulder, Colorado R&D centre, while IBM produces the wafers at its fabrication plants.
?One key thing is whether National Semiconductor will be able to take over the Cyrix design from IBM,? said D?Elia. ?It hasn?t got as advanced microprocessor fabrication technology as IBM. For the foreseeable future, National is going to have to keep running with IBM.
?National Semiconductor is already pretty strong in PC support and peripheral chips but not in microprocessors. The company has been refocusing and wanting to go into system level integration.?
National pledged that it will pool resources with Cyrix to develop ?systems on a chip? that will be cheap enough to allow vendors to make PCs for under $500.
Brian Halla, CEO of National Semiconductor, said the manufacturer will provide x86 chips for a range of computers, including network PCs, handheld PCs, Net browsers and other information appliances at extremely affordable prices.
Jay Swent, CEO of Cyrix, said: ?By combining National?s complementary technologies and high-volume manufacturing with both the Media GX and 6x86MX processors, we enable growth and creation of new markets.?
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