As we predicted (CI No 3,689), Integrated Device Technology Inc is indeed set to exit the Intel-compatible processor market. The Santa Clara, California-based semiconductor company announced the decision yesterday in reporting improved first-quarter financial results. Net income for the quarter was $8.5m on revenue that was essentially flat year-over-year at $154m, compared to a year-ago loss of $50.9m – which included a $28.9m restructuring charge. Earnings per share for the quarter were $0.09, when analysts surveyed by First Call were looking for just $0.04.
IDT said first-quarter sales of the communications memories, SRAMs and logic products all grew from the fourth quarter but sales of microprocessors declined sequentially due primarily to significantly weaker sales of its WinChip x86 processors. Thus the company is set to follow National Semiconductor Corp’s lead by quitting the Intel clone market altogether and says it will license or sell the WinChip technology and certain assets of its Austin, Texas-based Centaur Design subsidiary. IDT claims to have already received several expressions of interest from various unnamed parties and has pledged to either reach a deal or close the business by the end of its current fiscal quarter.
NatSemi announced in May that it would sell its Cyrix processor unit after the business proved to be nothing but a drag on earnings since its acquisition in 1997. Initially, the company had high hopes of being competitive in the market for low-end chips but ultimately realized that margins were prohibitively low.
Similarly, IDT says the Centaur subsidiary has generated significant intellectual property for it, but asserts that its ability to squeeze profits from the highly-competitive marketplace dominated by Intel hasn’t met its expectations. Instead, the company will focus on the more attractive communications market. Other than writing off reserves for remaining WinChip products during the first quarter, the company says it doesn’t expect to see any other significant costs associated with the move.
