Hardware News

A Year Ago: IBM aims for bigger slice of chip pie

Martin Veitch ZDNet.co.uk

Published: 05 Nov 1998 07:30 GMT

IBM is aiming to be a bit more aggressive in the processor business.

The IBM Microelectronics Division, to give the department its full name, has recently been making a quiet success of its remit to make Big Blue a success selling to third-parties.

The firm claims it sold over 500,000 CPUs to indigenous European PC vendors in the fourth quarter of 1996 alone. Together with its chip designer Cyrix, it believes it accounts for about five per cent of all X86 processor sales in the world. Under terms of their agreement, IBM provides manufacturing capability for Cyrix in exchange for rights to license the Texan firm's designs in IBM-branded parts.

Now, like Cyrix, the firm hopes it can capitalise on a leap in sales of cheaper PCs. In the US, sub-$1,000 PCs were 23 per cent of units sold in the first half of 1997, compared to seven per cent a year ago. It plans to bid for a large slice of that pie by stepping up marketing and advertising activity in order to better compete with Intel and AMD.

Interestingly, IBM claims that many clone brands prefer to buy from IBM than Cyrix itself. "The Tottenham Court Road guys get a free ride from the IBM brand and we're recognised for testing parts very carefully. We've displaced Cyrix in Granville and we're seeing a lot more of that type of success," said Steve Wainwright, sales director for northern Europe at IBM Microelectronics.

Wainwright said he was unconcerned that IBM had chosen to build some PCs based on chips from rival AMD. "In a way it helps as no-one could accuse us of nepotism," he said.