Chip Vendors Rally Around Graphics, Digital TV

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Two silicon competitors -- one established company and one
start-up -- came out with good news for purchasers of advanced-digital set-tops last week.

Broadcom Corp., the largest supplier of chips used in
set-tops and cable modems, added an advanced graphics chip to its widening product line.
The new silicon, dubbed the "BCM7014," is the company's first step into the
graphics-chip market -- one that is already saturated for personal computer applications,
but largely untouched for set-top use.

At the same time, TeraLogic Inc., a silicon start-up that
hung its shingle in March, came out with a chip and a reference design called
"Cougar," targeted toward digital-TV sets and set-tops.

Broadcom's chip is targeted toward next-generation
set-tops, said Tim Lindenfelser, the company's vice president of marketing. It will enable
the display of studio-quality text on TVs attached to set-tops that include the chip, and
it will give operators the ability to display Web content in its native form.

Without the Broadcom chip, or alternate forms of
preprocessing, Web text and content tends to look elongated and fluttery when placed on TV
screens. But in a demonstration of the BCM7014, scrolling text and Web-based images were
crisp and readable, even from "couch distances."

Broadcom executives described the new effort as a way to
enable simultaneous viewing of high-quality Internet content and Web sites, interactive
guides, multiple layered graphics and video windows, using standard TV monitors.

Broadcom decided to enter the graphics-chip marketplace
last year, when it acquired the company, run by a former lead executive, that developed
the "Eagle" chip, which is now being used by Scientific-Atlanta Inc. Plus,
Broadcom continues to seek all of the pieces for a single, integrated set-top chip, and
advanced graphics is one of those elements, Lindenfelser said.

"As chips start to shrink in cost, we need to start
glomming them together," he added.

Henry Nicholas, president and CEO of Broadcom, said the
BCM7014 "will cost-effectively allow consumers to view Internet content directly on
their TV, with quality similar to their PC."

By cost-effective, Nicholas was referring to a $21-per-chip
price tag, in quantities of 100,000 per year. That's about $6 more than graphics chips
currently being used in the PC market, but the BCM7014 also includes several key,
cable-specific elements, like a video encoder and the ability to use a shared memory bus,
Lindenfelser said.

Broadcom's target market includes predictable names, like
General Instrument Corp. and S-A, as well as "second-source" players like
Panasonic Consumer Electronics, Thomson Consumer Electronics, Pace Micro Technology plc,
Samsung Telecommunications America Inc., Toshiba America Consumer Products, Pioneer New
Media Technologies, Nokia Multimedia Network Terminals and Sagem, among others.

Two weeks ago, TeraLogic won the nod from Samsung, Sanyo
Electric Co. and Toshiba for its advanced graphics chip, the TL750.

Analysts said Broadcom might face challenges in hitting the
top two players -- GI and S-A -- because both companies have already lined up their
graphics-chip suppliers.

"My goal is to undo [GI's and S-A's graphics-chip
arrangements]," Lindenfelser quipped.

What's new from TeraLogic, beyond its TL750 chip, is the
TL850 digital-TV decoder and accompanying Cougar reference platform that will enable
manufacturers to "rapidly develop PersonalJava- and Windows CE-compliant
set-tops," said Kishore Manghnani, vice president of marketing for TeraLogic.

TeraLogic will demonstrate the TL850 -- a 10
million-transistor, 304-pin chip -- at the Western Show next month, and the company will
ship it by mid-1999, Manghnani said. He wouldn't discuss pricing.

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