February 01, 1999, Issue: 827
Section: News
Compaq, IBM in talks over copper Alpha chip
Edward F. Moltzen
New York -- Compaq Computer Corp. is talking in earnest with rival IBM
Corp. about forging an alliance under which IBM would manufacture
Compaq's copper-based Alpha processors, according to executives.
Discussions over a possible Alpha alliance were begun by Digital Equipment
Corp. and IBM before Compaq bought Digital last year.
The talks-which were described by some sources as tepid at best after
Compaq took control of the Alpha Technology-now apparently have moved
into a critical phase over the copper issue.
Steve Severson, Compaq's Alpha marketing director, said the company must
move the microprocessor toward the new copper technology, which IBM
developed and rolled out last year. "We're talking with IBM now," Severson
said.
Federal antitrust regulators have pressured Compaq to find third-party
manufacturers of the 64-bit Alpha microprocessor. That task has taken on a
new and urgent twist as the industry-including chip giant Intel Corp.-has begun
to see copper processors as essential.
Compaq has no chip-manufacturing capability of its own, so it must rely on
outside parties. However, negotiations to supplement its existing capacity from
Intel and Samsung Electronics Co. Ltd.-which have been making noncopper
Alphas under agreements with Compaq-have not yielded any new deals since
the Digital acquisition.
"It's just a very time-consuming process," said Jim Parsons, another Alpha
marketing director at Compaq. "You have to talk about things such as the
future direction of the architecture, sync up relative plans along the lines of
that, and make sure there is a good economic fit for both partners. We're
working out the details on these things as fast as possible."
Houston-based Compaq has an agreement with Samsung, under which
Samsung is responsible for about half of total Alpha production.
Antitrust regulators have been concerned that Compaq, in light of the Digital
buyout, maintains Alpha as a viable alternative to Intel's Pentium family. And
earlier this month, Intel said it would invest about $100- million in Samsung to
boost development of the Direct Rambus memory systems, which Intel
supports.
Advanced Micro Devices Inc., Sunnyvale, Calif., also is engaged in
negotiations with Compaq over production of Alpha processors, according to
an AMD spokesman. However, AMD's plant planned in Dresden, Germany,
which will be copper-enabled under a partnership with Motorola Inc., will not
be ready until 2000.
The AMD spokesman said he was not aware of the talks between Compaq
and IBM and declined further comment.
"The one lurking in the background so far has been IBM," said Severson, who
was discussing Compaq's Alpha options. "I expect something will pop soon."
An IBM spokesman declined to confirm or deny discussions with Compaq,
but said the Armonk, N.Y.-based computer giant now manufactures
copper-based processors contractually for other OEMs. Last year, IBM
began supplying copper-based PowerPC 740 and 750 processors to Apple
Computer Inc.
"IBM's process technology is one of the best in the world," said Martin
Reynolds, vice president of technology assessment at San Jose, Calif.-based
Dataquest.
"Copper can certainly help make chips faster," Reynolds added. "And Alpha
has its reputation founded in speed, so what we expect to see is IBM able to
deliver a faster Alpha to Compaq so it can continue to maintain Alpha
leadership."
Intel, Santa Clara, Calif., has said that a move to copper technology is
inevitable. However, executives have said that it will not incorporate copper
until the generation after the 0.18-micron manufacturing technology, which it
will use to produce chips later this year.
Instead, they said, Intel will start using copper-instead of aluminum-for its
circuitry when it drops its processor size from 0.18 micron to 0.13 micron.
This is not expected until late 2000 or 2001, essentially leaving IBM as the
only major manufacturer turning out copper processors today.
IBM's strategy regarding its leading-edge capacity, including copper, "is very
much in flux," said Mike Feibus, principal analyst at Mercury Research,
Scottsdale, Ariz.
"Copper is the next turn of the screw after aluminum because it offers faster
speed with less power, in other words, less heat," Feibus said. "And, if
anything, Alpha is designed for very high clock rates, so it probably, like no
other, can take advantage of [them] sooner."
While Intel maintains it will not integrate copper into its technology until its
processors reach a size of 0.13 micron, IBM now is using copper it at 0.18
micron. Compaq's current road map calls for the Alpha, which now is
shipping at 0.35 micron, to move to 0.28 micron in early 1999 and to 0.18 by
as early as late 1999. Version EV8 of the Alpha, which will be 0.13 micron, is
slated some time in 2001, according to the road map.
Although some industry experts have feared the Alpha will eventually wither
and die, Parsons said Compaq has made strong gains in advancing the chip
technologically and in the marketplace, and will continue to do so even as
copper technology becomes pervasive.
Marcia Savage contributed to this story.
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