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Technology Stocks : Intel Strategy for Achieving Wealth and Off Topic
INTC 40.56+10.2%Nov 28 9:30 AM EST

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To: Sonki who wrote (13542)11/23/1997 1:18:00 PM
From: TechnoWiz  Read Replies (1) of 27012
 
Good Sunday Sonki et all: Here's a news item that should provide food for thought for all Intelites and dinner guests to ponder:

news.com

Intel: Pentium II not easy
for Cyrix
By Michael Kanellos
November 21, 1997, 6:45 p.m. PT

While Cyrix claims it has obtained the right to
incorporate Intel's Pentium II patents into its future
chips, Intel says that at best these rights will only
get Cyrix halfway there.

Crucial technology relating to the Pentium II is
protected by trade secret, not patents, Intel
spokesman Chuck Mulloy said. Therefore, even if
Cyrix can obtain the rights to the patents through its
new parent company, National Semiconductor,
Cyrix will still lack access to the trade secrets it
needs to make a Pentium II.

Intel's counter-statement is the latest salvo in what
could turn out to be a highly visible and crucial
dispute in the semiconductor industry.

Cyrix has stated that a cross-license between
National and Intel gives it the right to make chips
based on Pentium II designs--designs that Intel so
far has refused to license. If Cyrix proves to be
correct, it could open the door to competition in the
high-end desktop arena because it will mean that at
least one other vendor can make Pentium IIs.

But the crucial technology not covered by the
patents regards the system bus, said Mulloy, which
is the computer's internal vehicle for transferring
data to and from the processor. The Pentium II
uses a proprietary system bus called "Slot 1" that
differs from the "Socket 7" bus used by the Pentium
class chips currently marketed by Cyrix and
Advanced Micro Devices.

As a result, computer vendors and motherboard
manufacturers have to chose whether to design
products for the Pentium II or for other processors.
The growing popularity of the Pentium II puts Cyrix
and AMD at a competitive disadvantage since they
cannot emulate or obtain plans to the Pentium II.

"The [Pentium II] bus is protected by patents and
trade secrets," Mulloy said. "Having access to the
patents doesn't give them all the technology."

Linley Gwennap, editor in chief of The
Microprocessor Report, agreed, adding that Cyrix
would still face a huge design effort to actually come
out with a Pentium II-style chip. "There's a lot of
stuff out there that Intel doesn't put on its patents," he said.

Gwennap further pointed out that Intel has also
been granted overall system patents, that is, patents
for circuit boards or other computer features that
are necessary to make a computer run on a Pentium
II. Intel currently issues additional licensing for
components and circuit boards to third-party
manufacturers so that they can make Pentium II
computers.

Intel, he said, doesn't necessarily have to issue these additional patents to third parties who chose to
adopt a Cyrix-made Pentium II-class chip. Intel has actually litigated this issue in court and lost, he
added. However, the previous case will not likely
be binding. Intel thus could at least slow up Cyrix
with a lawsuit.

Richard Belgard, a consultant for MicroDesign
Resources, which publishes The Microprocessor
Report, said Cyrix could use reverse engineering to
replicate the bus. Reverse-engineering results,
combined with the license, would then open up an
opportunity for the company.

"You can reverse engineer trade secrets and it's not
that hard," he said. "If they can determine these
trade secrets by reverse engineering, it's a huge
market."

Steve Tobak, vice president of corporate marketing
at Cyrix, said Wednesday that Cyrix could legally
use the patents to make Pentium II chips. While he
said Cyrix has not committed to making Pentium
II-style chips, the company could start to roll sometime in late 1998.

rgds

Wiz
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