Chips and Technologies

~ the obituary ~

An IBM PC/AT motherboard in 1984 was a field of small logic chips. Ninety-odd separate devices did the plumbing between the processor and everything else, and copying that board meant sourcing and laying out all of them, which is exactly the barrier IBM was relying on. Chips and Technologies took the plumbing and put it into a handful of parts that anybody with a purchase order could buy. That is what a chipset is, and this is the company that made it a product.

Gordon A. Campbell and Dado Banatao founded it in Milpitas, California in December 1984, without a factory. It designed the parts and had them made at contract foundries elsewhere, which made it one of the first fabless semiconductor companies and let it move on a schedule an integrated manufacturer could not. The first product was announced in September 1985: a four-chip EGA graphics set that replaced over twenty of the discrete circuits on the standard adapter card.

The AT chipset followed. The 82C206 arrived in 1986 as the core of what became NEAT, the New Enhanced AT set, and the five chips together absorbed 63 of the 94 logic devices on IBM's system board. Hewlett-Packard, NEC and Tandy bought them. So did the Taiwanese board industry, which is the part that mattered, because a clone maker could now build an AT-compatible motherboard from a catalog. Revenue went from $12.7 million in fiscal 1986 to $80.2 million a year later. By fiscal 1989 it was $217.6 million, and fiscal 1990 came in at $293.4 million.

Then Intel decided that the logic around its own processors was its business. Prices for 16 and 32-bit system logic dropped 19.4 percent in 1991 alone. Revenue went backward to $225.1 million in fiscal 1991 and $141.1 million in fiscal 1992, with a net loss of $63.9 million that year and another $49.1 million the next on sales of $97.9 million. Between June and November 1992 the company cut its head count by a fifth and announced plans to cut a fifth again.

What it did next was the reason it was worth anything in 1997. It walked away from motherboard logic and became a graphics chip company for laptops, where low power draw and LCD support mattered more than raw speed and where Intel was not competing. Intel announced it was buying the company on 27 July 1997 and opened a tender offer at $17.50 a share on 1 August. The offer closed on 21 January 1998 with 97.6 percent of the stock tendered, at a price of around $420 million.

~ the case file ~

~ sixty-three circuits into five ~

The number is the whole argument. Ninety-four logic devices sat on IBM's board and 63 of them went into five parts, with everything left over available generically. A board maker in Taipei no longer needed to reverse-engineer IBM's arrangement, because the arrangement now came in a bag from a company in California that would sell it to anyone. IBM had built its position on the assumption that the difficult part of a PC was the board, and Chips and Technologies priced that assumption at a few dollars a unit.

I got online in 1998, the year Intel finished buying this company. By then the word chipset meant a line on a motherboard spec with Intel's name against it, or VIA's, and it was the sort of thing you typed into a forum signature on donanimhaber next to the processor and the amount of RAM. Nobody I knew could have told you who had invented the idea of selling the thing as one part. The company that did it was already inside Intel, and the piece Intel had actually wanted was a graphics chip for laptops.

~ the graphics years ~

The laptop graphics business was real and unglamorous. A C&T 65545 sat in the IBM ThinkPad 365 in November 1995, and parts from the same family went into a long list of notebooks through the middle of the decade. The company had also gone international early, with a European base in Neuchâtel and design centers in Munich and Taipei, on the back of foreign customers who were 67 percent of net sales by 1992.

Intel folded the acquisition into the graphics side of its Computing Enhancement Group, and the parts kept shipping for a while under its ownership. Then in January 2000 a group of former employees set up Asiliant Technologies, and Intel licensed them the rights to build and support the old C&T chips, which is how a 1995 notebook graphics controller stayed available to the people who still needed one. The last thing the company that killed the clone barrier produced was a legacy support contract.

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