Canadian graphics chipmaker ATI Technologies Inc has won a contract to supply General Instrument Corp with Rage graphics chips for 7.5 million cable set-top boxes over the next three to five years. The company will initially supply General Instrument – which is manufacturing the boxes for Tele-communications Inc – with Rage Pro chips, later moving to Rage II chips – which are due to launched at the end of this month. The chips are for General Instrument’s low-end set-tops based on 175MHz RISC processor that will run Microsoft Corp’s Windows CE embedded operating system. ATI will supply the chips and digital video disk (DVD) drivers at $25 a time. The company should realize around $37.5m in revenue a year from the contract but does not expect to see any revenue until the third or fourth quarter of 2000. There will a soft roll-out of the boxes in the third quarter of 1999, with volume production into 2000. As well as screening DVD films, the ATI chips will enable the set-top to run games – further facilitated by the Direct X 3D graphics application programming interface (API) in the CE OS, in much the same fashion as a video games console. The contract is a consolidation of ATI’s strong position in the ever fickle graphics chip and board market. According to a report by Mercury Research Inc, ATI is the top supplier of graphics chips to the PC industry, with a 27% market share in the desktop graphics sector, rising to 35% in dedicated 3D graphics chip shipments and 31% of the 3D graphics PC notebook market. However, as a spokesperson for the company says, ATI will be looking to build on its set-top box contract as the general market cycle in the set top industry is three to four years, whereas a graphics chip in the PC arena has a lifespan of six months to year.
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