(FORTUNE Magazine) – A NEW KIND of semiconductor chip is about to work wonders on a vast assortment of products, including many standard household items. The chip is helping produce air conditioners that run without thumping stop-and-go noises, fluorescent lights that are more efficient and last longer, flat panel displays for computers that show sharper images than ever before, and new gadgetry for automobiles. The chips also hold the promise of dramatically reducing energy consumption by making alternating-current motors 40% more efficient than they are today. This latest chip is called a smart-power integrated circuit. It combines on a single bit of silicon the logic of a computer and the electric-power handling capabilities usually assigned to a collection of power transistors and other dowdy components: thyristors, capacitors, and Zener diodes. The microminiature smart-power chip will replace all those tongue twisters (see photograph, page 96) and bring efficiencies to the design and operation of products that incorporate motors or lights. Because these chips can take high voltages--up to 100 times the five volts that ordinary computer chips run on --they are sometimes called high-voltage integrated circuits. Some industry executives believe that the smart-power chip market will equal that of microprocessors that run computers. The benefits of smart-power chips are like those of other integrated circuits: minuscule size, low cost, and ease of mass production. With the new chips, says Michael S. Adler, manager of General Electric's power electronics laboratory in Schenectady, New York, ''we are on the edge of the second electronics revolution.'' The revolution had its roots in the early 1970s, when James Plummer, a professor of electrical engineering at Stanford University, was searching for a way to power a portable reading machine for a colleague's blind daughter. He came up with a high-voltage chip by applying the metal oxide semiconductor technology, or MOS, that is used in making standard integrated circuits. With the chip, Plummer's colleague developed the Optacon, which uses a small camera to pick up images of letters in words printed in ordinary books and newpapers. Plummer's chip converts the images into electrical impulses that push up small pins on a pad to form letters and numbers. Plummer's smart-power chip caught the eye of several semiconductor companies. Siliconix Inc. of Santa Clara, California, and Supertex Inc. of nearby Sunnyvale immediately set about commercializing Plummer's work. Siliconix specializes in making power transistors and other semicondutors for sale to industrial and military customers. By avoiding the personal computer and electronic games markets, the company bucked the semiconductor industry's recent downturn: it earned $8.4 million on record sales of $96.3 million in 1984, and its stock, traded over the counter, recently reached $19.75 a share, a 52-week high. Supertex, on the other hand, mainly produces standard- issue integrated circuits. In the nine months that ended in December, it lost $820,000 on sales of $13.3 million, and its stock is in a slump. The two companies are no longer alone in their enthusiasm for smart-power chips. Though the market is tiny, it is growing fast. Arthur E. Fury, marketing vice president of Siliconix, estimates smart-power-chip sales at $1 million last year, $8 million this year, and $80 million next year. The lure of such a rapidly increasing market has already drawn Texas Instruments, National Semiconductor, RCA, and other semiconductor manufacturers. Most are still in the design stage with smart-power chips or are producing them only in small quantities. Two giants are further along: Motorola, which aims to corner the automotive market, and General Electric, which wants to dominate the production of smart-power chips for fluorescent lights and the small motors that go into appliances and industrial tools.

One of the biggest beneficiaries of smart power will be the small alternating-current motor. An estimated 95% of all motors in the U.S. run on alternating current, and they can operate only at the speed determined by the frequency of the current. AC motors consume an estimated 60% of all electric power in the U.S., much of it wasted because they run at constant speed. Smart-power chips will allow AC motors to electronically adjust the speed of the motor, and the amount of electricity needed, to the task at hand. A drill, for example, would automatically accelerate instead of slowing down when it encounters harder metal. For the moment at least, smart-power chips are going only into very small horsepower motors, the ones used in household appliances and industrial tools. In a few years they will be showing up in larger motors as well. As the principal mover behind the transformation of dumb AC motors, GE both makes the smart-power chips and can put them into its brand-name appliances and machine tools. James A. Baker, an executive vice president at GE, sees the arrival of smart power as being central to his company's future: ''We've got the winning combination.'' In April, GE will introduce the first of its products to use the smart-power chip--a device the size of a kitchen matchbox that, when attached to a small AC motor, will allow the motor to run at variable speeds. Any company that uses or produces an AC motor is a potential customer. Smart-power chips will soon start replacing all kinds of electromechanical relays and switches, particularly in appliances. In washing machines the chips will eliminate the gears and transmissions that adjust the constant speed of the motor to the different washing cycles. In most air conditioners, the motor stays on until the desired room temperature is reached, then cuts off. A variable-speed motor, by contrast, will slow down or speed up to keep the temperature constant--a more efficient operation. ! WASHING MACHINES with variable-speed motors will be on the market this year, according to GE's Baker. They will not come from GE but from a foreign manufacturer using GE's chips and motors. Smart air conditioners, from U.S. as well as foreign manufacturers, are already being tested and will be on the market next year. Although GE wants to dominate in smart-powered appliances, opportunities for fast-moving small companies won't be lacking. Privately held XO Industries Inc. of Mountain View, California, builds a smart-power ballast for fluorescent lights. A ballast activates the lamp and then prevents too much current from flowing into it. XO Industries builds one that uses relatively small amounts of electricity, eliminates flickering, and allows the lamp to be dimmed. So far the new XO ballast is powered by discrete power components, but it still makes fluorescent fixtures run 40% more efficiently than its old- fashioned counterparts. XO estimates that one division of the U.S. General Services Administration could save $60 million a year in electricity in its offices by switching to such ballasts. When smart-power chips go into the next generation of ballasts--XO says that could be within a year--the cost of the ballast, now more expensive than the ordinary variety, will drop. The automobile industry will be another big user of smart-power chips. Their utility in cars will be ''unbounded,'' says J. Charles Tracy, head of the electronics department at General Motors' research labs. Tracy notes that designers have been cramming more and more electrical features--power windows, power seats, special lights--into automobiles. The trend toward shrinking cars without sacrificing leg or headroom, says Tracy, ''is what's really pushing the interest in smart-power electronics in the auto industry.'' The current electrical scheme in a car calls for masses of copper wire to run from a central location to the site of each electrical device and back again --taking up lots of prized space. Smart-power chips would allow an entirely different, much more economical wiring scheme. Only one or two wires would run throughout the whole car in a loop, with the electrical parts hooked up like bulbs on a strand of Christmas tree lights. Nestled with each ''bulb'' in the car will be a smart-power chip. If the chip were at the taillight, say, it could do more than turn the light on. If it found that the light didn't respond to the current, it would send a message to the dashboard that the light was out. Tracy also sees that smart power might add flexibility to automobile horns: ''You'd send different messages to the smart-power chip on the horn, depending on what kind of sound and volume you wanted. A tap on the horn would produce less sound; more pressure would make the horn sound very loud--if you're about to hit somebody.'' Some GM test cars have already been equipped with smart-power chips; by the end of the decade smart-power features will show up in many Detroit-made cars. The Japanese, as is their wont, may use smart power sooner. Some U.S. models already have trouble indicators, such as a dashboard signal that reports burned-out lights. But these options have been executed with expensive electronics such as sensors; the chips will make the widespread use of these features affordable. Executives at Motorola, which is already a major supplier of automotive electronics, estimate that smart-power chips could cut the 70 pounds of copper wiring in an average car by half. A Boeing 747, according to one educated estimate, could shed 10,000 pounds of wire by going to smart power. Smart power is also helping to widen the market for flat panel computer screens that use either electroluminescent or gas plasma technologies. These technologies produce images far superior to the more common liquid crystal display (LCD) screen. But up to now the new screens have been far too expensive for widespread use. That's partly because electroluminescent and plasma screens emit light, a process that uses lots of energy, while LCD screens merely reflect light--as anyone knows who has tried to read one in the dark. Smart-power chips can run these screens more economically than ever before. So more screens are being manufactured and their prices are coming down. Planar Systems is selling its electroluminescent screens for $800 vs. $3,000 a year ago. HEWLETT-PACKARD has just introduced a $4,995 personal computer for engineers with a nine-inch electroluminescent screen, operated by smart-power chips supplied by Supertex and Texas Instruments. According to industry sources, IBM is testing flat screens with smart-power chips, and Apple Computer engineers are contemplating a military version of the Macintosh personal computer with a flat screen for use in the field. Even though some appliances and tools that use smart-power chips are years away from market, the prices of the chips themselves are already coming down. Supertex, which charged $45 a chip as recently as a year ago, now sells them for about $10. And the company wants to get the price down to $1 by 1988. That's probably realistic, since widespread use of the smart-power chips--and lots of competition among their manufacturers--will ultimately cut unit costs and prices. In that respect, this second electronic revolution is looking a lot like the first.