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National To Block IBM From Selling Its Chips
(09/03/98; 11:04 a.m. ET)
By Mark Hachman, Electronic Buyers' News
National Semiconductor's Cyrix Group will move to block IBM Microelectronics from selling its Cyrix-designed microprocessors as early as the first quarter of 1999, said sources close to both companies.
National's manufacturing relationship with IBM, however, will remain in place, sources said. To date, the 686MX and M II microprocessors designed by National's Cyrix subsidiary are manufactured by IBM on a foundry basis, with IBM keeping half of the finished wafers in payment.
But several sources have indicated that National (company profile) is eager to end its chips-for-foundry agreement with IBM (company profile). The issue, they said, is that IBM and National have been marketing the same products to customers, allegedly placing National at a competitive disadvantage. Representatives for both IBM and National officially denied that IBM's rights to sell the Cyrix chips have been affected.
Because of IBM's extensive testing and packaging programs, conservative PC original-equipment manufacturers like Compaq Computer have purchased what were perceived to be more reliable processors from IBM. While the Cyrix-tested chips were often faster, the price of the slower, high-yield IBM-tested chips was low enough to undercut Cyrix, the source said. "IBM was a really good competitor of Cyrix," an industry source said.
The source reported that Santa Clara, Calif.-based National had made the decision to discontinue its payment scheme some time ago, preferring to negotiate its own contracts without competition from IBM. IBM reportedly asked for a delay until 1999 to consider its options.
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