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CIRRUS LOGIC ASSESSING LICENSING FEES FOR 3D
TECHNOLOGY
01/01/98
Multimedia Monitor
(c) 1998 Phillips Business Information, Inc.
3D chip manufacturers could face millions in unexpected costs because
Cirrus Logic Inc. [CRUS] is assessing licensing fees for intellectual
property that lies at the heart of their designs.
Unless two deals in the works hit a last-minute snag, S3 Inc. [SIII] and
Intel Corp. [INTC] will pay between $50 million and $100 million for that
technology foundation, according to sister publication Multimedia Week.
The imminent deals have more to do with S3 and Intel's fears of being
sued for patent infringements than the companies' desire for Cirrus
technology, industry sources said. While defending a lawsuit on its face
might not cost S3 or Intel as much as the licensing deal, it could have a
negative impact on each company's stock.
Cirrus Logic executives would neither confirm nor deny the deals beyond
saying, "We're always in licensing discussions." Intel officials wouldn't
comment on the deals and S3 executives couldn't be reached at deadline.
Jon Peddie, president of market research firm Jon Peddie Associates, said
Cirrus owns key patents for VGA controllers and bus management
technology. He described Cirrus' portfolio as the "heart and soul" of
graphics technology.
Other insiders agree the S3 and Intel deals are the result of Cirrus
leveraging its intellectual property.
"They've been very diligent about patenting their developments whereas
S3 has very few patents," said Michael Boich, president and CEO of 3D
graphics firm Rendition Inc.
Intel and S3 aren't the last companies that will have to pay up or risk
facing Cirrus' lawyers. "It won't be the end," Peddie said. "There are 20
other companies that are probably in some kind of violation."
As to the depth of Cirrus' patents, Dean McCaron, an analyst with
Mercury Research, said, "They can probably knock on the door of every
major company."
3D graphics share leader S3 holds roughly 50 percent of the market and
has shipped tens of millions of controllers, but the company has fallen on
hard times by not being able to offer anything other than low-cost chips.
That misstep has sent the company's stock price tumbling. In the last year,
S3 's stock hit a high of $20.12 and a low of $6. The stock closed at
$6.13 Dec. 5.
Since Intel has yet to ship any 3D graphics, it's unclear if the company has
violated patents yet, but the company's relationship with S3 dates back at
least a year.
The impending deals with S3 and Intel will help offset those costs, albeit
years later, and help fuel the company's audio initiatives, which are proving
very successful. (Cirrus Logic, 3100 W Warren Ave., Fremont, Calif.
94538-6423, 510/624-7286) |
