How Via, National will skirt Intel restrictions
By Michael Kanellos
Staff Writer, CNET News.com
July 7, 1999, 1:30 p.m. PT
Via Technologies has discovered the secret ingredient that will allow the company to produce chipsets, and likely processors, that will compete directly against products from Intel: legal loopholes.
Via and National Semiconductor today announced that the two companies have signed an agreement under which National will manufacturer chipsets designed by Via, including the controversial chipsets that will support faster 133-MHz memory and contain a 133-MHz system bus. The chipsets will contain the logo of both companies, said Via sources, an important development.
Arcane as that might sound, the arrangement could have significant implications. First, the deal could neutralize a lawsuit filed by Intel against Via earlier this month that likely would have blocked Via's chipsets from coming to market. Unlike Via, National has an extensive cross-license agreement with Intel, which Via can now take advantage of. Large companies like this often enter into these agreements to ensure that their patents don't conflict.
Second, the agreement could pave the way for the faster, yet relatively cheap, 133-MHz memory to come to market.
Third, the seemingly harmless dual-logo provision is the icing on the cake. It seems to re-open a legal loophole that has allowed companies such as National's Cyrix division, which it sold to Via last week, to make products that compete against Intel's without the threat of legal liability.
"It really does push the limit," said Rich Belgard, an independent patent consultant. "But I think having a dual logo solves any problems."
From a product standpoint, the most tangible effect will likely be the release of the next generation of Intel compatible chipsets from Via. PC makers, motherboard manufacturers, and memory companies have been eager to adopt Via's Intel compatible chipsets so they could graduate from memory running at 100-MHz, today's standard, to 133-MHz memory. This type of technology is becoming more important to the ever-increasing speed of computers.
"The memory guys all have the product in the pipeline. Every PC manufacturer in the world has 133-MHz devices," said Dean Hays, director of marketing for Via. The only thing preventing adoption now, he added, is logistics.
Intel, currently, does not have official plans for this faster memory, only the more expensive, and somewhat controversial, Rambus variety. "Because of the price premium and availability, Rambus is not going to be in the mainstream part of the market, at least not this year," said Michael Slater, principal analyst at MicroDesign Resources.
Earlier this month, Intelrevoked a technology licensing agreement with Via and filed an action in federal court for patent infringement, actions which effectively killed Via's efforts. But National does not have this problem. National's extensive cross-license agreement with Intel puts Via's products back in action and gives manufacturers a way around adopting Rambus memory, for now.
Intel is likely currently reviewing its chipset road map to accommodate 133-MHz SDRAM, Slater added. In the meantime, Via at least will be able to release a solution. "Via is a major chipset vendor," he said.
The "fab" exception
On the legal front, the deal also appears to provide greater insulation to Via customers, according to Belgard. Under current law, a chip manufacturer can make an Intel compatible chip if it either has a license from Intel or if it consigns to have its chips made in a fabrication facility that has a license with Intel.
This important "fab" exception came out, ironically, in a lawsuit between Cyrix and Intel. National's cross-license with Intel ordinarily would allow for National to make chipsets, or any other product, for Via under the fab exception, said Belgard.
However, in the most recent renewal of the agreement between National and Intel, the fab exception was deleted, he said. National can make products that take advantage of Intel intellectual property, but not on behalf of other companies after 2000.
Enter the dual logo. By containing the two logos, the chipsets can effectively can be said to be a National product. In the end, Intel might be able to sustain a suit against Via for earlier violations of the revoked licensing deal, but it becomes irrelevant as the Via-National chipsets come to market.
A National spokesman said that National would not market the products. A Via spokesman, however, said that the product would contain a National logo. In any event, both Via and National said that the arrangement insulates the companies from suits by Intel. Intel could not be reached for comment.
Later this year, Via plans to come out with a Celeron clone. It has yet to pick a manufacturer. Stan Swearingen, general manager of Cyrix, however, has said that the company is developing "bulletproof" methods to avoid suits.
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