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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (38534)	10/31/1997 6:18:00 PM
From: Gary Kao	Read Replies (1) \| Respond to of 186894

Just posted: StrongArm may be the plum of the DEC/INTEL deal. Any comments or thoughts? Gary www5.zdnet.com (sorry for the screwy formatting; I'm forced to use a Mac <g>)) StrongARM may be plum of Intel, Digital deal By Joe McGarvey October 31, 1997 10:31 AM PST Inter@ctive Week Online In addition to delaying and possibly avoiding a costly court battle, Intel Corp.'s proposal to purchase Digital Equipment Corp.'s semiconductor operations could provide the microprocessor giant with added strength in one of the few chip markets that Intel does not already dominate, according to industry analysts. In addition to Digital's chip fabrication plant and the rights to Digital's Alpha microprocessor technology, the $700 million offered by Intel earlier this week would transfer ownership of Digital's networking chip and embedded processor operations to Intel, pending approval by the U.S. Justice department. The networking chip operation makes several chips for networking equipment, such as switches and interface cards, which duplicate products in Intel's product family. However, the embedded operation is made up of Digital's StrongARM microprocessor, a low power-consuming chip that is already used by several makers of handheld computers and Internet appliances, including Apple Computer Inc. and Northern Telecom Inc. By bringing the well-regarded StrongARM chip into its stable of microprocessors, Intel could establish a greater presence at the low end of the processor market, said Harry Fenik, an analyst with Zona Research Inc. Although Intel's Pentium family of microprocessor dominates the high end of the semiconductor market, Intel has not had great success in adapting its product line to run non-PC devices, Fenik added. A series of obstacles, however, lies in Intel's path. First of all, said Nathan Brookwood, an analyst with Dataquest Inc., a San Jose research firm, the proposed deal, which also includes a 10-year cross-licensing pact, has to meet federal approval. And if any part of the agreement should raise eyebrows at the Justice Department, Brookwood said, it would be the acquisition of the StrongARM technology. "The Feds might say, 'Intel doesn't dominate the embedded systems market, and why should we give them a sharp bullet to go after that market too?'" added Brookwood. Another snag could be related to objections from Advanced RISC Machine Ltd. (ARM), a U.K.-based chip designer that licensed technology used in the StrongARM to Digital. Brookwood, however, said he would be surprised if ARM objected to Intel's taking control of the technology. A third source of uncertainty over the fate of the StrongARM chip comes from inside Intel, Brookwood said. While some divisions within Intel might view the StrongARM processor as an opportunity to extend Intel's market dominance, others might be reluctant to deviate from the company's plan to move Intel-grown technology down into the low end of the market. If nothing else, the proposal delayed litigation, which was to have started on Wednesday, regarding patent infringements charges filed by both companies. Early this year, Digital accused Intel of using technology from Digital's Alpha microprocessor in the design of several chips from Intel's Pentium family. Intel then countersued Digital, claiming the Alpha chip contained intellectual property belonging to Intel.