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September 27, 1998

CYRIX LEAVES IBM STABLE

By CBR Staff Writer

National Semiconductor Inc has told IBM Corp it no longer wants the company to manufacture processor chips for its subsidiary Cyrix, just weeks after denying rumors it planned to do so. NatSemi went public with the announcement on Friday, although a spokesperson for the chipmaker said the two companies had been working out an agreement for the last month. From today onwards, IBM will no longer be able to sell Cyrix 6X86MX PC chips to its OEM partners, but it will continue to produce the processors for NatSemi. IBM, which has been serving as a Cyrix foundry for 10 years, will gradually phase out all production by the end of this year, the spokesperson said. NatSemi will take a one-time charge of approximately $50m to $55m in its second quarter of fiscal 1999, which ends November 29, 1998. When we acquired Cyrix last year, it was our full intention to bring the manufacturing inside as quickly as we could, the spokesperson said, we wanted to concentrate on making 0.25 micron chips in our new fab and IBM was producing 0.35 wafers. The news is being seen as a turnaround by NatSemi, which at the beginning of this month denied press reports about its plan (CI No 3,489). The party line is that IBM didn’t want it to happen but NatSemi’s financial predicament forced its hand. Analysts had taken it to task for utilizing only 40% of its fab capacity. As if that wasn’t enough, IBM was doing a better job selling Cyrix parts than NatSemi itself.

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