Intel cancels plan to enter digital TV chip market

November 1, 2004

Intel has scrapped plans to enter the digital television chip business, marking a retreat from a major component of its consumer electronics initiative, Reuters reported.

The cancellation, which follows a string of missteps by the chip maker, eliminates a major competitive threat faced by Texas Instruments, whose chips for rear-projection televisions have become a successful enterprise.

Earlier this month, Philips Electronics also announced it would halt development and production of rear-projection televisions based on the technology. Philips said its share of the market was too small.

Nine months ago, Intel announced plans for an aggressive push beyond the personal computer and into consumer electronics with new chips for big-screen, high-definition televisions. The chips used liquid crystal on silicon (LCoS) technology, which had never before been commercialized on a wide scale.

Intel President Paul Otellini, who is expected to take over as chief executive next year, said in January that Intel would change the economics of television with LCoS technology — which combines liquid crystals, a mirror-like surface and a silicon chip.

Intel initially planned to deliver chips to TV makers in the second half of this year, and expected TV sets to be in the hands of its customers by the end of the year. This would make thin, high-definition sets available for less than $2000 Intel said.

Those sets were expected to pose fierce competition for Texas Instruments’ Digital Light Processing technology, a competing rear-projection engine that has shipped to 50 TV manufacturers since 1996.

In August, the first signs of trouble for the LCoS initiative surfaced, Reuters said. Intel indefinitely postponed the project, saying it had decided to improve picture quality before introducing the product.

Top executives of Intel, in a recently completed review of its 2005 product plan, decided that resources dedicated to the LCoS project would be better shifted to extending the company’s core computer chip business into consumer electronics products.

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