Just posted: StrongArm may be the plum of the DEC/INTEL deal. Any comments or thoughts?
Gary
www5.zdnet.com
(sorry for the screwy formatting; I'm forced to use a Mac <g>))
StrongARM may be plum of Intel,
Digital deal
By Joe McGarvey
October 31, 1997 10:31 AM PST
Inter@ctive Week Online
In addition to delaying and possibly avoiding a costly court
battle, Intel Corp.'s proposal to purchase Digital Equipment
Corp.'s semiconductor operations could provide the
microprocessor giant with added strength in one of the few
chip markets that Intel does not already dominate, according
to industry analysts.
In addition to Digital's chip fabrication plant and the rights to
Digital's Alpha microprocessor technology, the $700 million
offered by Intel earlier this week would transfer ownership of
Digital's networking chip and embedded processor
operations to Intel, pending approval by the U.S. Justice
department.
The networking chip operation makes several chips for
networking equipment, such as switches and interface cards,
which duplicate products in Intel's product family. However, the
embedded operation is made up of Digital's StrongARM
microprocessor, a low power-consuming chip that is already
used by several makers of handheld computers and Internet
appliances, including Apple Computer Inc. and Northern
Telecom Inc.
By bringing the well-regarded StrongARM chip into its stable of
microprocessors, Intel could establish a greater presence at
the low end of the processor market, said Harry Fenik, an
analyst with Zona Research Inc. Although Intel's Pentium
family of microprocessor dominates the high end of the
semiconductor market, Intel has not had great success in
adapting its product line to run non-PC devices, Fenik added.
A series of obstacles, however, lies in Intel's path.
First of all, said Nathan Brookwood, an analyst with Dataquest
Inc., a San Jose research firm, the proposed deal, which also
includes a 10-year cross-licensing pact, has to meet federal
approval. And if any part of the agreement should raise
eyebrows at the Justice Department, Brookwood said, it would
be the acquisition of the StrongARM technology.
"The Feds might say, 'Intel doesn't dominate the embedded
systems market, and why should we give them a sharp bullet
to go after that market too?'" added Brookwood.
Another snag could be related to objections from Advanced
RISC Machine Ltd. (ARM), a U.K.-based chip designer that
licensed technology used in the StrongARM to Digital.
Brookwood, however, said he would be surprised if ARM
objected to Intel's taking control of the technology.
A third source of uncertainty over the fate of the StrongARM
chip comes from inside Intel, Brookwood said. While some
divisions within Intel might view the StrongARM processor as
an opportunity to extend Intel's market dominance, others
might be reluctant to deviate from the company's plan to move
Intel-grown technology down into the low end of the market.
If nothing else, the proposal delayed litigation, which was to
have started on Wednesday, regarding patent infringements
charges filed by both companies. Early this year, Digital
accused Intel of using technology from Digital's Alpha microprocessor in the design of several chips from Intel's
Pentium family. Intel then countersued Digital, claiming the
Alpha chip contained intellectual property belonging to Intel. |
