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DEC BECOMES FABLESS AS INTEL BUYS ALPHA PLANT FOR $700M

The much rumored settlement of the lawsuits between Intel Corp and Digital Equipment Corp regarding Alpha chip intellectual property (CI No 3,160) turns out to be awin for both companies and their customers according to Digital chairman Bob Palmer, although observers see little chance of Alpha surviving in the long term. The deal involves Intel buying Digital’s semiconductor manufacturing operations for around $700m and the cross-licensing of each other’s patents, and could ultimately accelerate Digital’s adoption of Intel’s new IA-64 architecture. But both companies were reluctant to discuss the details of the deal, which ultimately could turn out to be crucial. The benefit to Intel appears to be that not only will Digital drop the lawsuit it took out against the company last May, but also that it gets an additional fabrication facility in Digital’s Hudson plant, which it intends to operate at full tilt. To do this, since the plant currently runs at only about 50% capacity due to the number of Alpha chips actually sold, it will update the 0.35 micron processes at the plant so that it can manufacture its own 0.25 micron technology there, as well as the Alpha chips. Intel also takes on Digital’s development operations in Israel, and Austin, Texas. According to Palmer, the benefit to Digital and its customers is that the company will no longer need to make large investments in semiconductor manufacturing, but rather like the Sun Microsystems model of a ‘abless’ semiconductor designer, it will be Intel that will continue to invest in the manufacturing of future generations of Alpha technology – though for how long, the two companies were not prepared to say.

Alpha and IA64

Palmer, of course, assures customers that Alpha has a long-term future. But in the same breath Digital says the deal will enable it to focus on readying a full range of products based on Intel’s IA-64 architecture, the first iteration of which will be the Merced chip, due in 1999 (CI No 3,265). It will also endorse Intel’s IA-64 architecture by porting its Digital Unix to the it, with technical help from Intel. The deal also includes a 10-year patent cross-license agreement, which Intel president and chief operating officer Craig Barrett confirms will eliminate the distracting litigation between the two companies. But there was no mention of Intel giving Digital discounts on Intel chips for up to five years, something that was widely anticipated. While Merced is probably too far down the line to include much of Digital’s technology, Intel did not rule out incorporating some of it in future IA-64 iterations. Finally, and not less importantly, Intel gets the rights to manufacture and sell other non-Alpha semiconductor products, notably it gets the StrongARM for embedded applications, based on Advanced Risc Machines Ltd’s core design, which it says would be a candidate for its future embedded products. The StrongARM team will all move over to Intel, although the Alpha and Alpha-related design teams stay at Digital. The deal is subject to US government approval, and is expected to take up to six months to complete.

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CBR Staff Writer

CBR Online legacy content.