Philips sees no 'Paradise' in graphics boards

Sunnyvale, Calif. - Philips Semiconductors is shutting down the Paradise graphics-boards business unit that it acquired from Western Digital Corp. about 10 months ago.

As of Aug. 9, the company has been quietly letting go the unit's 40-odd employees. A spokesman said, however, that Philips would keep Western Digital's graphics-IC business and its intellectual properties that came with the Paradise board-unit acquisition.

The Sunnyvale chip maker initially tried to sell the board business internally to the parent company's end-user system units, but there were no takers within Philips. Philips Semiconductors then tried to find an outside buyer, but that effort didn't pan out either.

Hence, the company had no choice but to shut down the graphics-board business unit, the spokesman said. He added that the Paradise operation has never been a critical core to Philips Semiconductors' business.

The acquisition of the Western Digital unit last October was part of an aggressive attempt to recast Philips as a semiconductor powerhouse and to recover some of the multimedia-IC market share the company had missed out on. Besides buying the graphics-board unit, with a plan to exploit its engineering resources to develop 2-D/3-D graphics ICs for the PC market, Philips Semiconductors has been involved in a spate of acquisitions and licensing agreements during the past 18 months.

Last September, with Spea Software AG of Germany, the company established a joint venture, SP3D Chip Design GmbH, to develop 3-D-capable, high-performance multimedia ICs for PCs and game consoles. The grand plan was to add the last piece of the puzzle-graphics-through acquisitions, and to work hand in hand with the Dutch parent company's internal development of a broad range of video, communication, MPEG-decoder and other multimedia ICs.

PC-driven

"It became clear to us that the semiconductor market is driven by the PC industry," Cees Jan Koomen, director of the multimedia and communications business group at Philips Semiconductors, said last year. "It would be foolish for us to preclude ourselves from that competition."

Over the last 10 months, Philips Semiconductors has been scrambling to coordinate its diversified resources, which range from the company's TriMedia media processors to dedicated 2-D/3-D graphics-chip expertise that originated from Spea and Western Digital.

As of today, however, Philips has not brought a single 2-D/3-D graphics IC to market. Clearly, getting a late start in 3-D graphics has put Philips Semiconductors behind the curve of the rapidly changing PC graphics-chip business in the last 12 months.

The move to close the Paradise graphics-board unit had to happen in order to rationalize the company's product line, the spokesman explained. The company is still not ready to unveil its new strategies, as "we are obviously still working on our new road map," he added.

Copyright 1996 CMP Media Inc.