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Chip's Diversify

     The largest computer chip makers are doing something odd: they are working hard to move away from the production of computer chips. That's right, Intel, AMD, Cyprus, and Texas Instruments are moving away from PC's. Over the past decade these companies have focused intently on making the fastest possible computer chips, and now they are recognizing that they may have been too narrowly focused. An amazing fact is glaring them in the face: the sale of Internet appliances will surpass the sale of personal computers by 2002, and by 2005 computer sales will be flat. The PC chip makers aren't going to blow away, they are just going to evolve. A few short years ago the only electronic devices storing information or accessing the Internet were desktop computers. The only way to communicate with others was in-person or with a corded phone. The definitions have become blurred. Now cell phones access the Internet. Electronic maps in our cars tell us when we've taken a wrong turn. Music can be downloaded from the Internet and stored in digital form rather than on tape. PDA's (Personal Digital Assistants, like the Palm handheld devices) store information, and can access the Internet on a train or sitting in a café.

    As the volume of electronic devices storing information and accessing the Internet shifts away from personal computers these computer chip makers are shifting in the direction of these new devices and other ventures. Texas Instruments up to a couple of years ago use to make computer chips, now they are one of the premier communication chip makers and no longer are in the PC chip market. Two weeks ago Intel released a chip-based personal music device, similar to a Sony Walkman, at the annual Consumer Electronics Show in Las Vegas. The device uses a new music-processing chip developed in-house at Intel. Intel is also involved in venture capital investing and web hosting centers. Some have said that the chip manufacturers may actually start competing with the companies that are their prime customers at this point in time. Other observers are starting to believe in the future the computer chip manufacturers will become large diversified conglomerates, the likes of a United Technologies. It will be interesting over the next couple years to see were these companies' expertise and capital takes them.


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