UPDATE 1-Intel cancels planned highest-speed Pentium 4 chip

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SAN FRANCISCO, Oct 14 (Reuters) - Intel Corp. (INTC.O: Quote, Profile, Research) on Thursday canceled plans to introduce its highest-speed Pentium 4 chip for desktop computers, marking another in a string of unexpected product changes, cancellations and recalls at the world's largest chip maker.



Intel, whose shares fell 2.4 percent, said it plans to move engineers and other resources to accelerate the introduction of "dual core" chips, which contain two microprocessors in a single chip. The Santa Clara, California-based company has said it plans to introduce dual-core chips for desktops, servers and notebooks sometime next year.

"It's not an easy decision to walk away from four gigahertz because we had a public position, but in our view for Intel and for our customers it's the right decision," Intel spokesman Chuck Mulloy said, referring to the speed of what was to be the fastest Pentium 4.

The product cancellation adds to an already bumpy year for Intel, which delayed a new line of notebook computer chips in January, recalled a desktop computer chip in June, and pushed back another notebook computer chip in July.

Chief Executive Craig Barrett sent a stern memo to Intel's 80,000 employees in July after the setbacks -- weeks before another delay, this time of a chip for rear-projection televisions.

Cranking up the speed of its Pentium 4 chips to four gigahertz, or billions of cycles per second, has been an elusive goal for Intel. When the latest rendition of the Pentium 4 was introduced in February, Intel said it would reach the 4 gigahertz speed by the end of the year.

In July, citing concerns about having enough supply to meet customer demand, Intel delayed plans for four gigahertz until the end of March 2005. Thursday's announcement puts an end to the goal entirely, at least for the current processor generation.

Both Intel and its arch-rival, Advanced Micro Devices Inc. (AMD.N: Quote, Profile, Research) , have shifted their focus from increasing clock speed -- a measure of how fast a chip can crunch numbers -- to a vaguer notion of performance encompassing multi-tasking, security, and multimedia.



The chip industry's own technologists have long predicted that engineers would face bigger and bigger hurdles as they cranked up chip speeds. Intel Chief Technology Officer Patrick Gelsinger has famously said that without a fundamental change in chip design, PC chips would become as hot as the surface of the sun within a decade.