Let's call VIA "David", because, lead by 45-year-old President and CEO Wen Chi Chen, the company is taking on a giant: Intel, the chip industry's own Goliath.
Chen will need more than a slingshot to go to battle, however. With revenue and brand recognition just a fraction of Intel's, VIA will need to couple competitive technology, aggressive pricing and market nimbleness to dance between the feet of Intel. Its strategy: Go after the low-end of the market, where Intel is less likely to stomp on competitors. And VIA will also rely on some of Intel's competitors - namely Advanced Micro Devices and IBM- to help in its qwest.
VIA is a newcomer to the processor market, but not to the PC chip market. VIA manufactures a number of popular chip sets, combinations of chips that perform specific functions. Through that business, the company has formed strong ties with
"We've been strong partners for some time with AMD," Chen said. "We are happy working with them."
Is fabless fabulous?
VIA is also a fabless chip company, meaning it does not have its own production capabilities. It farms manufacturing out to a number of partners, including National Semiconductor. IBM has also been mentioned as a potential manufacturing partner.
Despite the battle it faces, VIA is clearly not afraid of Intel, who it will wrangle with both in the market and in court.
Chen, in fact, is a 10-year Intel veteran, working as a design engineer on Intel's 386 and 486 chips. Chen left Intel in the early 1980s to found his own chip set company, Symphony Labs. He left Symphony to become President and CEO of VIA
"I think VIA is the best thing that ever happened to me," Chen said.
A born again Christian, Chen said his strong religious beliefs inspire not only his personal outlook, but VIA policy.
"Science and technology can go hand-in-hand with what the Bible tells us," Chen said.
From the Bible
His beliefs also motivated Chen to direct VIA to use chip code-names taken from the Bible. The company's Joshua processor, now known as the Cyrix III chip, was named after the biblical leader, who Chen describes as strong, courageous and unafraid to face up to his enemies.
"It's an honor to use the (Joshua) name from the Bible," he said.
A forthcoming Chip, based on WinChip, is named after the prophet Samuel. A third, code-named Matthew, is said to be a highly integrated, low cost processor.
With its religious fervor, the Joshua product launch on Feb. 22 was "one of the more unusual product launches I have seen in a long time," said Nathan Brookwood, principle at Insight64. There, according to attendees, Chen said, "With god on our side, we can beat Intel."
Chen's enthusiasm for his religion and its adoption into VIA's corporate culture shows in other ways as well. The company's home page carries a link to the prayer site World Pray. The site, sponsored by VIA, describes itself as a "non-denominational, nonprofit website whose primary goal is to unite people around the world through prayer and spread the word of God."
"The most unusual aspect of Chen and VIA right now is the religious aspect," Brookwood said. "It sets them apart. You're not going to see this on Intel.com or AMD.com."
Overclockers rejoice
Chen even applies his beliefs to "overclocking". Overclocking is the practice by some computer enthusiasts of raising their PC processor's clock speed past its factory rating.
While AMD and Intel are both trying to limit the practice to varying degrees, Chen addresses overclockers with a live-and-let-live attitude. If a consumer wants to make changes to the chip, it's fine with VIA.
"We think that's something that the consumer can choose to do," he said. "Even if (resellers) sell a systems that's overclocked, as long at they can guarantee it, it's their issue."
Overclockers may be the least of Chen's worries, however. The legal battle between Intel and VIA, brewing since late last year, may soon come to a head in court.
Intel sued last year claiming VIA violated a licensing agreement that allowed the company to design and manufacture Chip sets for Intel's Slot 1 architecture for Pentium II and Pentium III processors.
The crux of the case, Intel said, is that VIA misused the Intel P6 processor bus. Intel has since revoked the license, but VIA continues to manufacture Chip sets for Pentium II and Pentium III.
"We don't think we're doing anything wrong. We don't think the lawsuit has any merit," Chen said. "The main idea (of the suit) is to scare away customers."
Low-cost PC market growing
But scaring away customers might not be possible, based on the growing demand worldwide for low-cost computers.
"I don't think Intel matters as much as it used to ... especially on the low end," Brookwood said. Via "may very well find some inroads (in North America). Wen Chi also has his eyes pointed ... toward the (price sensitive) Asian market."
The fastest growing segment of the PC market, according to VIA, is for low-cost PC. That market segment will be the focus of VIA's recently announced Cyrix III, announced this week, as well as future offerings.
The Cyrix III was designed for sub-US$1,000 PCs. Chen also expects the chip to be utilized in computing appliances -- simplified devices based on PC hardware that allow users to perform only certain tasks such as accessing the Web. These appliances, he said, may eventually outpace PC sales.
Analysts believe, however, that VIA will have to go lower on price in order to win PC makers' business.
VIA's 500 and 533 Cyrix III chips will cost US$84 and US$99, respectively. Since the pricing on Cyrix III was announced, both Intel and AMD cut prices on their respective value chips. A 500MHz Celeron chip from Intel now costs US$93, in 1,000 unit quantities, as does a 500MHz K6-2 chip from AMD. A 533MHz Celeron is now priced at US$127. (AMD's 550 K6-2 is US$189.)
Competing on price
"VIA is very committed to competing in the processor market using their fabless model," Brookwood said. "But no one is going to buy from VIA for a savings for US$8 or US$9."
The chip would have to be between US$35 and US$50 for it to sell well, Brookwood said. Because VIA, under its manufacturing contract, has to give a portion of that price to its manufacturing partner, lower prices could put pressure on its profitability, Brookwood said.
But assuming VIA is willing to negotiate with PC makers on price, VIA might make up the shortfall in volume.
"VIA does appear to have a competitive product, based on what the company has said ... especially because of (Cyrix III's) compatibility with the socket 370 infrastructure," Brookwood said. This presents "minimal hassle to the PC maker" building a system using the chip.
VIA's Cyrix III also offers a better feature set than the Celeron or even the K6-2. It offers more integrated cache than Celeron, 256KB, versus Celeron's 128KB and a faster system bus, 133MHz, versus Celeron's 66MHz and K6-2's 100MHz. The system bus provides a data pathway between the processor and system components, such as memory.
Ultimately, VIA's success or failure in the processor business does not rest on Cyrix III, analysts say.
Signature chip coming
Mike Feibus, principle analyst at Mercury Research expects Cyrix III to be a "repeat of (Cyrix's) MII's success, which was a mild success at retail."
"I don't see this as VIA's signature chip. The signature chip will come in about a year."
This chip will combine low cost and high clock speed, with a number of integrated features. VIA will support this chip with several of its own chip sets, allowing PC makers to build PCs with good performance, but low cost to address emerging PC markets.
Ultimately, VIA's success as a chip maker will not be tied to its share of the US retail market. Instead, the company will aim for a smaller share of the larger worldwide market, simply because "half of the market is not here," Feibus said.
