A Little Chipmaker With A Big Rival

Via Technologies is expanding right into Intel's path

Wen-chi Chen, president and CEO of Taiwanese chip designer Via Technologies Inc., prides himself on speaking his mind. Whether it's describing his religious beliefs---a Christian, Chen is a regular churchgoer who gives Biblical code names to new products--or taking potshots at archrival Intel, the 45-year-old entrepreneur is nothing like his more circumspect Taiwanese peers. And after a stellar 2000 in which Via racked up $1 billion in revenues and $210 million in profits, Chen is in no mood to heed critics of his plan to transform Via into an industry powerhouse. "We're getting real big," he says airily. "We have certain needs."

That means big changes for Via. In nine years, Chen has built the Taipei-based company into a world-class designer of chipsets--semiconductors that connect a computer's microprocessor to its memory, graphics, and other functions. But Intel remains a big threat, and the chipset may become less important as more functions are crammed onto a single device.

So Chen figures he needs to move to the next level. In January, he announced plans to invest in chip facilities in China, a first for a company that has long contracted out its manufacturing. While risky, the gambit could make Via part of an ambitious effort to build a Chinese semiconductor industry. And Chen has entered the microprocessor business, launching a chip, the Cyrix III, that competes with Intel's Celeron processor.

Last year, Via benefited handsomely when an Intel chipset ran into technical problems. Chen likes to tell how Via warned Intel beforehand but was rebuffed. At an industry event this month in Taipei, he cheekily suggested that the "I company" should join a Via-led alliance of chipmakers pushing a faster technology.

Chen's bluster aside, transforming Via won't be easy. Previous attempts by such Taiwan companies as Acer Inc. to break into the consumer market failed, largely because they lacked marketing clout. Trying to avoid the same fate, Via has acquired National Semiconductor's Cyrix unit and Integrated Device Technology's Centaur unit. "We feel we have all the required pieces," Chen declares. Still, National Semiconductor and IDT sold their microprocessing units after failing to compete against Intel.

BIBLICAL. Chen insists his timing is right. The Cyrix III is designed for sub-$500 PCs. And while computer sales slump in the U.S., they're expected to grow 30% in China this year. Via has a 60% share of the chipset market there and 10% of the processor market. Within a year, Via sees those numbers hitting 70% and 25%, respectively.

For their parts, Intel and its rival, California-based Advanced Micro Devices, are focusing on higher-margin microprocessors used in pricier PCs. They certainly aren't running scared. "If you look at the speed at which we and AMD have run in the last year," says Paul Otellini, an Intel executive vice-president, "it's hard for anybody else to keep up." Breaking into brand-name PCs won't be easy either. Consumers may be wary of buying a product that doesn't say Intel Inside.

Chen shrugs off the doubters. He plans to launch an updated version of the Cyrix (code name Samuel II) by midyear. Also in the works: a system-on-a-chip (code name Matthew). Asked if he sees his battle with Intel in David-and-Goliath terms, he grins and says: "I don't like to classify Intel as a Goliath. I'd like them to be part of the David camp." Until it is, though, Chen can't put down his slingshot.

    Before it's here, it's on the Bloomberg Terminal.