Intel?s licensing agreement to manufacture Advanced Risc Machines? (ARM) StrongARM chip suggests how important and impressive the Cambridge-based company?s chip technology really is, and the potential the processor has in emerging markets.
Intel has never manufactured chips it did not design and has only once decided to buy a licence to make another chip - Digital Equipment?s Alpha - as part of a deal to clear up an expensive legal battle. Although it does plan to launch Merced, Intel?s Risc chip collaboration with Hewlett-Packard, Intel?s agreement to licence and build the Risc-based StrongARM is the first time Intel has broken its successful business pattern of Cisc-based chips.
Analysts said the deal is an unparalleled move for Intel and proves just how valuable StrongARM could be for the processor giant. Despite widespread acknowledgement that there will be an explosion in the markets for low end PCs, network computers, personal digital assistants and small electronic devices, Intel has disappointed analysts and partners because it has not launched or announced the development of chips for those markets.
'VNU Newswire' revealed that the future of Digital and ARM?s co-operative StrongARM development was in the hands of company negotiators (see Newswire 19 November 1997), after Intel?s foundry deal with Digital. The three-month delay may have been the result of wrangling inside Intel over whether or not to adopt ARM and tough negotiating between ARM and Intel.
Digital senior vice president Harry Copperman said at the time that Digital will only fulfil its commitments to existing customers. ?StrongARM does not fit our new business model,? Copperman said. ?We cannot sustain that extra architecture.? That left ARM to discuss the chip?s future with Intel.
Older, cheaper Pentium chips use too much power and are too expensive for many uses - a Pentium costs $90 and uses around eight watts of power, while StrongARM costs $29 and uses 0.25 watts. StrongARM is also roughly a quarter of the size and even offers better performance at speeds of up to 200MHz, which explains design wins from computer, terminal and device vendors including Apple Computer, Philips and Wyse Technology.
Announcing the deal, Intel computer enhancement vice president Ron Smith admitted: ?StrongARM has tremendous potential in the market.?
All analysts who made public statements on the matter agreed, and some said the outlay of time and money to licence StrongARM is far lower than developing a similar processor itself. It was no surprise, therefore, that neither company revealed the terms of the licencing deal. Observers speculated that ARM had the confidence to drive a hard bargain with Intel - using some strong arm tactics of its own.
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