On 23rd April, the Federal Trade Commission (FTC) conditionally approved the Digital - Intel patent deal.
In a statement, the FTC announced that it would not block the settlement, which includes cross-licensing and the transfer of Digital's Hudson Fab to Intel. However, the Commission has ordered Digital to take steps to protect the Alpha processor, by seeking other licensees for the design, and other Fabs capable of manufacturing it. Advanced Micro Devices (AMD) and Samsung were mentioned as possible licensees, with IBM being an option for an alternative manufacturer. If Digital were to choose companies other than these, further approval would be required from the FTC.
The Commission's main aim is to prevent Intel using the deal to kill-off the Alpha design. In terms of performance, the Alpha is the most serious competitor to Intel's Pentium 2 and forthcoming Merced devices. The FTC wants to promote the Alpha so that it will remain a viable alternative, thereby enhancing competition in the market and providing the consumer with a degree of choice. By placing these conditions on its approval, the Commission has recognised that Intel is a significant power in the market, and needs restraining.
It seems likely that the conditions to the deal were proposed by Digital itself. The company has already had discussions with Samsung and AMD, and was thought to be looking for alternative manufacturers for its processor. Samsung already has an architectural licence for the Alpha, entitling it to design information, patents and future implementation details. This potentially allows the Korean company to develop its own range of Alpha-based processors. Digital has now agreed to form a joint enterprise with Samsung, providing technical and marketing assistance to develop the market. It has also agreed to buy a minimum of 50% of its Alphas from Samsung.
Negotiations with AMD are less well advanced. There is talk of an Alpha licence in the near future, and AMD has already licensed Digital's EV-6 high-speed bus. The latter will be used in the company's K7 processor, raising the possibility of computer designs able to accept either the K7 or Alpha. Some observers believe that this could be part of a new workstation strategy for AMD.
The FTC's intervention, however, is not enough to save the Alpha. Despite its technical superiority, it has not found a volume market and has become restricted to high performance UNIX and NT workstations. Digital, Samsung and AMD will have to exploit the Alpha's position as an existing technology before the Merced appears in 1999, and Intel's relentless expansion dominates the workstation market as well.
The position of the StrongARM is hardly mentioned by any of the parties. Following the agreement with ARM, the way is clear for Intel to continue development of the processor. It had been suggested that the FTC might not wish to allow Intel to gain such a powerful position in the embedded market, but it now seems that this was not one of their areas of concern. Final approval of the deal is likely to boost the StrongARM's market position, after months of uncertainty.
The patent-settlement deal is now all but struck. Intel expects to finalise the agreement within thirty days, and then will "move as quickly as possible" to absorb the Hudson Fab and the StrongARM product line. The FTC is, however, not yet finished with either Intel or Digital: the former is still under investigation on a broad range of monopoly issues, and the latter has yet to receive approval for its merger with Compaq.
ARM - Digital - Intel
Sources: TechWeb, News.Com.
Fab: An abbreviation for Semiconductor Fabrication plant, the factory where semiconductor wafers are processed into integrated circuits.
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