Intel Investors - Information on Intel's patents, chip sets and graphics chips.
Note - two people mentioned in this article - Sam Liu & Lew Paceley are former Intel employees. Paceley left Intel a few years ago to go to Cyrix. I guess he left Cyrix !
(Thanks to Frank Louie for pointing this out!)
Paul
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12/03 8:48A (DJ) Intel's Hold Over Key Patents An Obstacle For Graphics-Chip
Makers
Story 0272 (T.ATY, ATYTF, IBM, IBM.A, INTC-D, INTC, NSM, Q.ACE, SGI, SIII...)
By Dean Takahashi, Staff Reporter of The Wall Street Journal
NEW YORK -(Dow Jones)- Semiconductor makers are racing to improve graphics on personal computers by delivering a new level of miniaturization. But first they have to get past Intel Corp.
Makers of graphics chips hope to integrate their products with another category of chips, the "core logic" components that route data between the computer's central microprocessor chip and other parts of the system. Cutting down on chips helps PC makers save money, and some market watchers think such integrated products could capture much of the market for sub-$1,000 machines and laptop computers.
But there is a hurdle. Intel (INTC), the Santa Clara, Calif. microprocessor giant, holds key patents on the data pathway that connects core logic and the microprocessor. The situation has graphics chip makers scrambling for legal shelter, hoping to cut a licensing deal that could protect them from litigation for infringing Intel's patents.
"People are putting down speed bumps that you have to get around," said Samuel Liu, chief executive of Silicon Integrated Systems, a Taiwanese company that makes an integrated graphics and core logic chip set. Liu believes his company's products don't infringe on Intel's patents, but the company still is negotiating with the semiconductor giant because customers may feel more comfortable if Intel issues a license. It may sound risky, Liu says, "but tell
me a business that is not dangerous."
Getting a license isn't easy. For one thing, Intel is believed to be holding out for stiff royalties. Intel is also planning its own product in the field, an integrated chip, code-named Whitney, that is expected next year.
Via Technologies Inc., another Taiwanese company, last week reached a cross-license agreement with Intel after talks that stretched on for a year.
Via will pay royalties to Intel in exchange for rights to make chip sets that use the patented data pathway associated with Intel's Pentium II microprocessor. Neither company is discussing financial terms, but Intel makes it clear that it was an attractive proposition.
"We get access to some patents and they have to pay a royalty," Intel said. "We will license in exchange of value for value."
Paying royalties to Intel isn't the only way out. Another route is to arrange to have chips manufactured by another company that has a broad patent cross-license with Intel. Acer Labs Inc., another Taiwanese chip maker whose largest shareholder is Acer Inc., says it has an arrangement with a licensed manufacturer. Companies with licenses include International Business Machines Corp. (IBM) and National Semiconductor Corp. (NSM).
Still another route is to acquire patents that might pose problems for Intel, using those as leverage to negotiate a cross-licensing deal. S3 Inc. (SIII), of Santa Clara, Calif., used that approach and is negotiating Intel over a license that would allow it to make an integrated chip.
ATI Technologies Inc. (ATYTF), of Thornhill, Ontario, recently paid $67 million to buy startup Chromatic Research Inc. to get technology needed for integrated products. Henry Quan, vice president of marketing at ATI, says the deal expanded the company's patent arsenal. "All you need is one good patent to have a defensive position," he said.
Some graphics vendors believe, perhaps wishfully, that Intel won't sue while it is under investigation by the Federal Trade Commission, which has questioned the way Intel wields its patents against customers and partners.
But Intel isn't the only one asserting patent rights in graphics.
S3, Silicon Graphics Inc. (SGI) and 3Dfx Interactive Inc. (TDFX) have all sued other graphics chip makers. Nvidia Inc., another graphics chip maker, has been sued four times in the past year as it prepares for its initial public offering.
"It's like the Cold War," said Lew Paceley, an Nvidia marketing vice president. "When all the sides are armed with nuclear weapons, then nobody launches."
The pressure may increase when Intel introduces Whitney, which analysts expect to have a big impact on the market because of the company's manufacturing and marketing power.
"The graphics industry as a whole is losing money and it could go from bad to worse as Intel comes out with Whitney," said Michael Slater, principal analyst at Micro Design Resources Inc. in Sebastopol, Calif. "Some graphics players could get locked out of the mainstream market if they don't have a license."
Copyright (c) 1998 Dow Jones & Company, Inc.
All Rights Reserved.
Additional Codes (ATITF, ATY-T, TDFX, I/CPM, I/CPR, I/SEM, N/EM, N/HIY,
N/HYL, N/TEC, N/WEI, N/WSJ, M/TEC, P/DAA, P/DCA, P/DCO, P/DCZ, P/DEX, P/DSE,
P/NDV, R/ASI, R/ASIA, R/CA, R/CN, R/FE, R/NME, R/NY, R/ONT, R/PRM, R/TW,
R/TWN, R/US, R/USE, R/USW)
manufacturing and marketing power.
"The graphics industry as a whole is losing money and it could go from bad
to worse as Intel comes out with Whitney," said Michael Slater, principal
analyst at Micro Design Resources Inc. in Sebastopol, Calif. "Some graphics
players could get locked out of the mainstream market if they don't have a
license."
Copyright (c) 1998 Dow Jones & Company, Inc.
All Rights Reserved.
Additional Codes (ATITF, ATY-T, TDFX, I/CPM, I/CPR, I/SEM, N/EM, N/HIY,
N/HYL, N/TEC, N/WEI, N/WSJ, M/TEC, P/DAA, P/DCA, P/DCO, P/DCZ, P/DEX, P/DSE,
P/NDV, R/ASI, R/ASIA, R/CA, R/CN, R/FE, R/NME, R/NY, R/ONT, R/PRM, R/TW,
R/TWN, R/US, R/USE, R/USW) |
