LCoS YIELD ESTIMATES STILL 3-4 MONTHS AWAY, INTEL SAYS

Intel is “working through the manufacturing process” on LCoS, Burns said. “We're pretty confident we can make this technology work in volume. But we're in that process right now; so give me another 3-4 months, and I can tell you yields and manufacturability and things like that.” Intel is working hard to make LCoS work, and has “pretty good manufacturing guys” assigned to the project, Burns said. “We will insure that the quality we ship will be stunning,” Burns said. “This is no different than any other product we make. It has to live up to Intel quality.” Once Intel masters LCoS production in the high volumes it’s seeking, “I think it will fundamentally shift the economics in that industry, which is pretty exciting,” Burns said.

In his keynote, Burns said Intel would bring to LCoS “what we do best -- innovate and integrate.” LCoS is “so fundamental a change, it will bring those who aspire to [own] today but can’t afford -- high-definition big-screen experiences,” Burns said. “What’s really cool about this [is,] by moving the process generations forward, we can actually integrate more and more capability into the base-level silicon that the liquid crystal sits on top of. Think about very intelligent devices going into very cost-effective TVs, fundamentally changing the economics of the current TV industry -- not an evolutionary change, but a revolutionary change.”

Responding to our question whether Intel might be getting ahead of itself by discussing super-intelligent LCoS TVs before it could discuss production yields, Burns said “it’s standard silicon that we lay the liquid crystal on top of, and everything below the liquid crystal is what we've done forever.” The ability to integrate memory or “all kinds of things” into the base silicon, “we know how to do that very effectively,” Burns said. “We also know about speeding up the process, which in this example will give you better resolution. The manufacturing issues we're working ourselves through is making sure we can build it in super-high volume with the Intel quality around it.” The “integration stuff we know how to do,” Burns said, but he conceded that the “liquid crystal on top of the silicon is a bit new to us.” However, Intel has “one of the best factories in the world” and “our best and our brightest minds” working on it and “making sure we can deliver on our commitments,” Burns said. “Are we ahead of ourselves? No. Are we being our normal cautious, conservative company? You betcha.” It couldn’t be determined which Intel plant or plants are working on LCoS, and an Intel spokesman said the company normally doesn’t disclose such information.

Burns and other Intel executives at the IDF disclosed few new details about possible LCoS assembly partners. Moreover, how to market Intel’s impending involvement in LCoS rear-projection TVs to consumers remains unresolved within the company, Burns said. But he ruled out going to market with Intel-branded sets. Burns said “the specifics of how we tell a consumer that it’s got Intel silicon inside it or not, quite frankly we haven’t figured that out quite yet.” He said “there’s a lot of opinions and views inside Intel, and at the end of the day, there’s only one or 2 that count, and they haven’t quite ruled on that one yet.”

In his keynote on what consumers would expect from products under the digital home concept, Burns said the number one requirement would be to “keep it dirt-simple.” Consumers “don’t want to become IT experts,” he said. “If we have to roll a truck to someone’s house” to complete an installation of a digital-home component, “we have somehow failed as an industry,” he said. As part of Intel’s vision, his presentation showed a filmed demonstration of streaming first-run movies to a consumer’s home on “the first night they open,” along with the ability to pause the film and watch it on another device elsewhere in the house.

In a post-keynote briefing with reporters, the scenario depicted in the presentation prompted many questions about how Intel expected the movie industry to go along, given the recording industry’s outcry against peer-to-peer networks and unauthorized Internet retransmission of music content. “Quite frankly, in a lot of ways, the music industry didn’t provide an alternative” for consumers who didn’t want to pay $14 for an album-length CD when they only wanted to buy 3 songs, Burns said in response. The volume of music sold through services like iTunes and Rhapsody “has started to go through the roof” because it has given consumers “a vehicle to buy in a legal manner to get that content,” he said.

“When there’s a vehicle, people will go after it, and the same thing is true in the video space,” Burns said. He said there has been a marked change in relations between the technology and motion picture industries the past 12 months. While the industries constantly were at each other’s throats in Washington a year ago, he said, “I think you've noticed, you don’t see that anymore, and the reason is we're working very closely with each other because I believe they understand the opportunity is huge for new business models, new vehicles, new revenue streams. And so they're working with us.” Within that framework, Intel and others in the technology industry “will stick with the position we have always had,” he said. “We need to balance the protection of the intellectual property with the fair-use capability of moving that content -- which once I pay for it, should be viewable on any device within my home.” Burns said he believed the technology and content industries “have made a lot of progress in that space” because “we've focused on the consumer rather than focused on fighting with each other.”