An Auction of Chip Patents May Ignite Bidding War for Advantage Over Intel
By Dean Takahashi Staff Reporter of The Wall Street Journal
A defunct Silicon Valley company called Exponential Technology Inc. has set off an unusual scramble among the world's semiconductor giants, which are preparing to bid for Exponential patents that could affect future competition with Intel Corp. and its pending litigation with Digital Equipment Corp.
Exponential, a failed San Jose, Calif., microprocessor maker, is preparing to auction off its portfolio of 45 issued and pending microprocessor-related patents next week. Industry executives and analysts expect bidders to include Intel, Digital, Advanced Micro Devices Inc. and Cyrix Corp., which has agreed to be acquired by National Semiconductor Corp.
The Exponential patents are believed to include inventions that could help develop next-generation microprocessor chips that match features of forthcoming products from Santa Clara, Calif.-based Intel. In particular, patent experts say that Exponential's patents feature a variety of tricks that could allow competitors to make clones of a long-awaited chip called Merced, which Intel is designing with help from Hewlett-Packard Co., and reduce the risks of a suit by Intel for patent infringement.
"It's a very good portfolio," said Richard Belgard, a patent expert in Saratoga, Calif., who has examined the Exponential patents. "It will make it easier for people to compete with Intel or license patents from them."
Intel, which dominates sales of microprocessors for personal computers, has a large portfolio of patents and routinely sues companies that make clones of them. Digital, however, this May turned the tables by suing Intel for infringing on patents on Digital's Alpha chip, touching off a dispute that has led to countercharges on both sides.
Digital declined comment on whether it intends to bid on the Exponential patents, but patent experts believe it will. If Digital controlled patents that predate Intel's Merced patents, they say, it could use those patents for additional leverage in the battle.
Mr. Belgard said Exponential filed for one Merced-like patent on Aug. 31, 1994, about six months before Intel filed for its similar patent. Stu Auvinen, a consulting patent agent for Exponential, added that Exponential's patents make it easier to build a microprocessor that processes both Intel-type computer instructions and instructions common to chips that use a design called reduced instruction-set computing, or RISC. Merced is expected to have similar capability.
"This filing predates Intel's filing and it is possible it could knock out their Merced patent," Mr. Auvinen said. "It has strategic value."
Intel, conversely, may want to keep such patents out of hostile hands. Tom Waldrop, an Intel spokesman, confirmed that his company was in discussions with Exponential about acquiring the patents. He denied, however, that the patents were relevant to Merced, Intel's upcoming 64-bit next-generation microprocessor.
Rick Shriner, former CEO of Exponential, said the company is auctioning off its patents to pay off its creditors. He said he first received word of interest in the patents in a phone call from Leslie Vadasz, Intel's senior vice president in charge of investments. When other companies learned of Intel's interest, they jumped into the action as well, Mr. Shriner said.
Other companies who received bidding information include graphics-chip maker S3 Inc., memory-chip designer Rambus Inc., multimedia company Chromatic Research Inc., and chip maker Texas Instruments Inc., according to Stephanie Dorris, former Exponential chief financial officer and a consultant in charge of the auction process. She said her company doesn't know exactly who will bid, but the patents are expected to raise millions of dollars.
Most of the companies she named declined to comment on whether they were bidding. A spokesman for Cyrix said the company was evaluating the patents but had not yet decided to bid. |
