Hewlett-Packard to Use Via CPUs for Chinese Market

Via Technologies Inc., the often-overlooked third player in the microprocessor arena, said Friday that Hewlett-Packard Co. (HPQ) has decided to use its low-cost, low-power chips in new energy-efficient business PCs in the booming China market.

HP's decision to use Via processors in a new Compaq desktop computer marks a substantial win for Via's processor business, which trails much-larger rivals Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) by a wide margin.

Taiwan-based Via occupies just a sliver of the worldwide processor market, usually only commanding about 1 percent to 2 percent, with Intel and AMD essentially controlling the rest, according to Mercury Research.

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Microprocessors are the core calculating engines inside computers, and Intel and AMD are waging a fierce battle for market share essentially without other competition.

The bulk of Via's business comes from chipsets, which are computer chips that connect the microprocessor to other system components.

Palo Alto-based HP is already using Via products in lower-profile "thin client" PCs — stripped-down computers that rely on a server to handle the bulk of the processing duties.

In selecting the Via processors, HP becomes the first major computer maker to adopt the Via product for a mass-market item.

Via said each 1.5-gigahertz processor consumes just 20 watts of power, lowering the amount of electricity needed to operate each computer. The company said the new computers will help businesses in developing areas build advanced systems without incurring burdensome power costs.

"It is vital that companies across China, not just in the largest cities, gain access to the vast productivity, efficiency and online resource benefits of IT and the Internet," Wenchi Chen, Via's president and chief executive, said in a statement.

Dean McCarron, president and principal analyst at Mercury Research in Cave Creek, Ariz., said emerging markets can often pose a problem for chipmakers because of lower pricing and power constraints.

However, he said the HP win provides important validation of Via's strategy.

"It's very positive news for Via," he said. "For a long time they were fighting a credibility gap with their processors. Via comes at its processor design from a completely different way than Intel and AMD. This is symbolic of the fact they've overcome that."