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At the time on-die cache was difficult to manufacture; especially L2 as more of it is needed to attain an adequate level of performance.
A benefit of on-die cache is that it operates at the same clock rate as the CPU.
Although a faster Pentium MMX would have been a lower-risk strategy, the industry standard Socket 7 platform hosted a market of competitor CPUs which could be drop-in replacements for the Pentium MMX.
Instead, Intel pursued a budget part that was to be pin-compatible with their high-end Pentium II product, using the Pentium II's proprietary Slot 1 interface.
All other Intel CPUs at that time used motherboard mounted or slot mounted secondary L2 cache, which was very easy to manufacture, cheap, and simple to enlarge to any desired size (typical cache sizes were 512 KB or 1 MB), but they carried the performance penalty of slower cache performance, typically running at FSB frequency of 60 to 100 MHz.
The Pentium II's 512 KB of L2 cache was implemented with a pair of relatively high-performance L2 cache chips mounted on a special-purpose board alongside the processor itself, running at half the processor's clock rate and communicating with the CPU through a special back-side bus.
The Mendocino Celeron, launched August 24, 1998, was the first retail CPU to use on-die L2 cache.
Whereas Covington had no secondary cache at all, Mendocino included 128 KB of L2 cache running at full clock rate.
Nevertheless, the first Celerons were quite popular among some overclockers, for their flexible overclockability and reasonable price.This was achieved by simply increasing the front-side bus (FSB) clock rate from the stock 66 MHz to the 100 MHz clock of the Pentium II, helped by several facts: the 440BX chipset with nominal support for 100 MHz and correspondent memory had already been on the market, and the internal L2 cache was more tolerant to overclocking than external cache chips, which already had to run at half-CPU speed by design.At this frequency, the budget Mendocino Celeron rivaled the fastest x86 processors available.Indeed, most industry analysts regarded the first Mendocino-based Celerons as too successful—performance was sufficiently high to not only compete strongly with rival parts, but also to attract buyers away from Intel's high-profit flagship, the Pentium II.Overclockers soon discovered that, given a high-end motherboard, many Celeron 300A CPUs could run reliably at 450 MHz.