Computers use Intel's chips, but cars and toys will use more
The Intel Corporation is riding high on the success of its 80386 32-bit microprocessor, the technology that has become the standard for a new generation of IBM PS II computer. But the Santa Clara, Calif., semiconductor company has already shifted its horizons to a new product area it believes has far greater market potential.
Intel is setting its sights on embedded controllers - the ``hidden computers'' - that can be incorporated into everything from toys to microwave ovens, automobiles to military equipment. This market is considered to be so promising that Intel has shifted its focus from the relatively limited market for PC chips to the potentially huge market for embedded control.
``For every microprocessor we ship out that goes into a PC, we ship six to 10 times as many microcontrollers for embedded control applications,'' says Vinod Mahendroo, an Intel marketing manager for embedded control.
The microprocessor is the intricate computer chip that serves as the basis for a wide variety of products, including personal computers, videocassette recorders, air conditioners, and laser-disc drives. When they are used as embedded controllers, they actually control the electronic equipment. They are typically programmed for these uses in the factory and are not reprogrammable.
According to Dataquest, a San Jose, Calif., company that tracks the semiconductor industry, the market for 4-, 8-, and 16-bit microcontrollers is expected to move from 763.5 million this year to 1.38 billion in 1993 - almost a doubling of demand.
The 4- and 8-bit chips are used in consumer electronics, such as stereo turntables, remote-control devices for televisions and VCRs, clock radios, and video games. The 16-bit microprocessors are found in more complicated applications like laser-disc drives, electric ranges, security systems, heating pumps, and air conditioners.
``Embedded controllers have been around for a long time,'' notes Alice Leeper, an industry analyst at Dataquest; ``but there's a growing recognition that the market is quite large.''
Mr. Mahendroo, however, believes the market is potentially explosive and says Intel is investing heavily in the area. ``Most people will be able to get by with just one personal computer, but they will need to use 20, 30, or even 40 other products that will be using embedded controllers.''
A typical automotive application would be for antiskid braking systems that use microcontrollers to activate the brakes when a car is beginning to skid. ``The content of electronics used in cars is increasing dramatically,'' says Mahendroo, ``and the kind of new functionality that is becoming possible for automobiles is awesome.''
But while Intel's proprietary copyright over the 32-bit 80386 microprocessor has enabled it to virtually corner the high-speed microprocessor market for computers, its positioning in the microcontroller area for more everyday uses is not so secure. Competition is fierce in an industry that is just waking up to the market's enormous potential.
``It's becoming the rage and the fashion in the industry for companies to see embedded controllers as the major focus area,'' Mahendroo says. ``Most major semiconductor companies are now participating.''
Japanese companies like Hitachi Corporation and NEC Corporation lead in the well-established 4- and 8-bit arenas, while Intel and Motorola are leading contenders in the emerging 16- and 32-bit markets. But according to Ms. Leeper, almost every semiconductor company has some presence in the embedded-controller market.
The 32-bit microcontroller is expected to be the fastest-growing market. Although demand for this chip is only 4.3 million in 1988 - compared with 385 million for the 4-bit and 377 million for the 8-bit, the potential for the 32-bit is much greater.
``It's the hottest new area,'' says Leeper, ``and PCs are the primary initial application.'' According to Dataquest, this market is forecast to grow 52.4 percent from 1988 to 1993. The potential growth of the market is also suggested by the number of new players that have entered the arena in the last eight months. At least 15 to 20 companies have introduced 32-bit products during this period.
But Intel was late entering this market. Its 32-bit 80960 microprocessor, which can be customized for embedded control, was just introduced in April. Andrew Grove, Intel's chief executive officer, has admitted the company was so involved in the 80386 microprocessor that it almost missed the embedded-controller market.
Intel's strategic move toward that market is clearly an effort to lessen dependence on the personal computer industry.
``It's a good diversification move,'' says Mahendroo. ``Our embedded-controller business would not be impacted by a sudden downsurge in the PC marketplace.''