Mile, From EETimes 7/5/99 Re: VIA NSM
techweb.com
Tiny Via aims Cyrix buy at Goliath Intel
Mark Carroll, Will Wade and David Lammers
Santa Clara, Calif. - Can upstart Via Technologies do what the venerable
National Semiconductor Corp. could not, and effectively compete with
microprocessor titan Intel Corp.? That was the question posed last week
when the little-known Taiwanese chip set maker announced the surprise
11th-hour acquisition of ailing X86 designer Cyrix Corp. from National.
Via brings a unique set of skills and weaknesses to its David-and-Goliath
battle. Though it expects to bring in less than $275 million in revenue this
year-miles from Intel's league-Via is backed by one of Asia's wealthiest and
best-connected high-tech families, the Wongs (see story, below). It is aiming
its charge at the volatile low end of the PC world: integrated processors.
For National, the deal comes just in time to avoid a self-imposed June 30
deadline to sell Cyrix or shut it down, and may save National from having to
sell its most advanced fab, in South Portland, Maine, if Via opts to build Cyrix
processors there. On Via's side, becoming the first Taiwanese company to
own a CPU vendor could solve a legal conflict that has just erupted with Intel
over patent rights. Still, it is far from clear whether Via can surmount the
thorny legal and market barriers that protect Intel's technology domain.
Via and National last week signed a letter of intent for the sale. Details are still
to be worked out, but executives said they hope to nail down the fine points
within the month.
The letter of intent did not specify selling price, but Stan Swearingen, general
manager of Cyrix's Richardson, Texas, facility, said Via is expected to pay
"quite a bit more" than the $150 million to $175 million that had been bandied
about on the street. National bought Cyrix in 1997 for $560 million.
Via will take over just as Cyrix readies 466- and 500-MHz samples of its
Socket 370-compatible processor, code-named Gobi, which goes into
volume production in the fourth quarter. By then, Cyrix will be ready to tape
out its Mojave processor, based on the Jalapeno core. That device will take
Cyrix into the gigahertz realm in the year 2000.
The merged Via and Cyrix operations could become a credible threat to both
Intel and Advanced Micro Devices in the low end of the PC market. "The
thinking now is to develop an integrated processor and north-bridge product
for the sub-$1,000 PC," said Dean Hays, marketing director at Via's U.S.
office in Fremont, Calif. "Having a processor core really will allow us to
compete in that space."
Intel slapped Via with a lawsuit on June 23, alleging it was violating the terms
of its P6 processor bus license. This was five days after Intel revoked Via's
cross-license agreement altogether, in theory barring Via from selling any chip
set that used the P6 bus-a substantial part of Via's revenue base.
When news of the suit hit Taiwan two days later, Via's stock price fell the
maximum 10 percent per day every day through last Wednesday. It is not
clear if the Cyrix deal will turn things around. The announcement was made
after the close of the market on Wednesday, and the market was shuttered
Thursday for a semiannual accounting audit.
Meanwhile, some of the company's customers balked at the prospect of
buying parts that could be under a legal cloud. "We definitely will not be using
any Via chip sets in the near future," said an official at one of Taiwan's largest
motherboard manufacturers. "Our distributors will not want anything to do
with Via-based boards for now."
Other motherboard manufacturers agree that Intel's lawsuit has effectively shut
them out from a major channel market.
In a statement late last week, Via vowed to fight the suit. "We have taken the
necessary legal action to protect our rights," the statement said. "Via will
continue its role as a leading supplier of P6-level chip sets, including as yet
unannounced PC133 solutions, under a third-party manufacturing agreement
that will be announced in the immediate future. Motherboard and OEM
customers have been kept informed of the issues involved."
Via's Hays said the main point of conflict was the 693 and 694 chip sets,
which use a 133-MHz bus speed. Intel has repeatedly said it will not be
producing components using a 133-MHz bus, focusing instead on bringing out
devices built around Rambus memory technology.
As a result, analysts have speculated that Intel would prefer to keep
133-MHz chips off the market for the short run, until the industry begins to
adopt Rambus DRAM and the faster bus speeds that go with it. "It seems
strange for Intel to try to hold the industry back, but that's what they seem to
be doing," Hays said.
"We are very well aware of what the contract allows," Paul Otellini, executive
vice president and general manager of the Intel Architecture group, said in an
interview before the suit was filed. "There are terms of that contract they are
obligated to support."
Hays conceded that Via's licensing deal with Intel probably does not cover
133-MHz parts, though he said the company's legal team was continuing to
examine Intel's complaint. However, the deal with National could solve the
problem.
"Our parts are going to be manufactured by National, and therefore they will
be covered by National's cross-licensing agreement with Intel," said Hays. To
eliminate any confusion, he said, the 133-MHz chip sets will be co-labeled,
with both Via's and National's logos stamped on the packaging.
"We already have samples of Via PC133 chip sets bearing the National logo,"
said one motherboard maker in Taiwan. "It seems a logical way for Via to
sidestep the Intel lawsuit."
It may be possible for Via to acquire the same rights on its own through the
Cyrix acquisition. Swearingen said Via and Cyrix have been assured "by the
best lawyers in the country" that National's ability to transfer its P6 license to
Via is "bullet-proof."
"Intel may want people to believe [that the license cannot be transferred],"
said Cyrix's Swearingen. "But I am confident that Via would not be paying the
amount of money that it is willing to pay without assurances that it can
withstand any lawsuits from Intel."
A spokesman for National said, "I don't think Via would have been interested
in this deal if they didn't think they could obtain cross-licensing rights."
An Intel spokesman was adamant that "the license with National is not
transferable" to any company that acquires part of National. (Cyrix did not
have its own X86 processor license from Intel, but before being acquired by
National it was legally protected because its parts were manufactured by
IBM, which has such an agreement.)
Linley Gwennap, editorial director for the Microprocessor Report (Sunnyvale,
Calif.), agreed that Via will not likely obtain an Intel license through the Cyrix
acquisition. "But if National is building the chip sets, then they should be
protected," he said.
The only sticking point is National's previously stated intent to sell off a
majority stake in its state-of-the art fab in Maine, which is where the Via
components would most likely be produced. "If National sells off part of its
share of the fab, I think it's a gray area whether the chips there would still be
completely protected," he speculated.
Nathan Brookwood, principal analyst at Insight 64, a Saratoga, Calif.,
research firm, suggested that a high-volume foundry deal to produce Via chip
sets and upcoming Cyrix processors could allow National to keep the fab "A
deal with Via to manufacture all their chip sets and Cyrix processors might just
fill that fab," he said. Via currently outsources its production to UMC Group
and Taiwan Semiconductor Manufacturing Co.
The National spokesman said the Via agreement does not include any
provisions regarding the future of the fab. Discussions are ongoing, he added.
"I think the two companies make an interesting combination," said analyst
Brookwood. "It wasn't a pairing that immediately came to mind, but it does
seem to pass muster. It would be nice if Via could impart some hustle into the
Cyrix organization."
Cyrix's Swearingen foresees an integration effort to include Via's core logic, a
graphics processor and the Jalapeno core with an on-chip interface to
high-speed memory such as Direct Rambus. Via has enlisted Trident to add a
graphics processor core to its core logic, and has a deal with S3 for an
integrated core logic-graphics part.
The idea, said Swearingen, is to have "an integrated part, similar to what Intel
is doing with Timna," a low-end MPU including graphics and RDRAM
controllers that's due out next year.
Ironically, such integration would allow Via to finish the job envisioned by
National chief executive Brian Halla, who acquired Cyrix in an effort to build a
PC-on-a-chip. National retains rights to some Cyrix cores for use in
integrated parts for information appliances.
Cyrix, awash in red ink, was put up for sale by Halla on May 5. Swearingen
said that virtually the entire engineering team remains on board. The acquisition
is being structured as an "IPO-able entity," he said, which means that stock
offerings may be forthcoming to the 362 Cyrix employees.
Marketing manager Mark Bode said Cyrix is currently manufacturing its MII
processor in National's 0.18-micron pro-cess, which yields parts running at
400 and 433 MHz. "In all the noise about the sale, the fact that we have
moved to a 0.18-micron process kind of got lost. But we accomplished a goal
set out by Brian Halla, to offer our products in National's 0.18-micron
process at the same time Intel moved to 0.18 micron," he said.
Swearingen said the Mojave chip will tape out in the fourth quarter on
National's process, introducing the processor a year from now at 800 MHz. It
will be based on the Celeron-compatible Socket 370 interface or "whatever
Intel-compatible interface is prevalent at the time."
But for most of next year, Gobi will be Cyrix's bread and butter. Based on the
Cayenne core, Gobi will include a redesigned floating-point unit and will
support a front-side bus running at 66, 100 and 133 MHz. It has a 64-kbybte
L1 cache and a 256-kbyte L2 cache, operating at the same speed as the
processor.
Said Swearingen, "If we have an 800-MHz product [out] in the third quarter
of next year, we won't be far behind Intel."
Copyright (c) 1999 CMP Media Inc. |
