Russian Engineers Develop Computer Chip That Beats Intel

["Hoang Duong Tuan" <tuan@toyota-ti.ac.jp>]

MOSCOW, Nov 25, 1999 -- (Reuters) British investment bank Robert Flemings
said on Wednesday it hoped to nail down funding by the middle of next year
for Russian computer engineers who say they have developed a microprocessor
that beats anything in the West.

The engineers, who developed computers operating Soviet missile defenses,
say their E2K chip runs several times faster than a chip in development by
Intel Corp and could roll off assembly lines in three years if they can
secure funding.

But the Russian team, Elbrus International, has not made an E2K chip yet -
it has designed and run simulations.

Elbrus engineers say their chip, based on ones developed by the same team
for the Soviet Union's military complex, will be fast and cheap, though a
factory might cost well over a billion dollars to build.

Flemings is looking to attract at least the $60 million needed to finish
engineering and develop prototype chips and is looking ideally for a
strategic investor. So far the Elbrus team has used its own money from other
work to develop the chip.

"Ideally you would expect the deal to crystallize somewhere in the middle of
next year," Vladimir Zamai, associate director of investment banking at
Flemings's Moscow unit, Fleming UCB, told reporters after a news conference.

"You are talking about a company that could have market capital of billions
of dollars with this kind of IP (intellectual property)," said UCB Fleming
investment banking Director Alexei Matveyev.

"In two or three years - it is quite realistic."

Elbrus has been looking for funding for at least a year. Initial suspicion
eased after a February article in trade journal Microprocessor Report.

It said Elbrus's estimates for the E2K chip were faster than Microprocessor
Report's estimate for Intel's Merced chip, in development. But it said the
E2K had not been completely tested.

The E2K is based on a type of parallel processing which breaks down tasks -
widely used in Soviet defense computers.

"Of course there is a stereotype now that if something is not begun in
America, it is not real," lead engineer Boris Babayan told reporters. "The
second problem is that the market is so strongly monopolized."

Elbrus does software work for Sun Microsystems, which has declined to
finance the chip.

Patents for the chip are held by Cayman Islands-based Elbrus International,
which in turn is held by Cayman-based Elbrus Services, controlled by the
Russian engineers.

Flemings said the company took the decision to register offshore because of
poor intellectual property protection under Russian law.