Intel is in negotiations with Digital to license its Alpha microprocessor technology, according to reports emerging from the US last week.
Under the terms of the proposed licensing agreement, believed to be worth as much as $1.2 billion (#750 million), Intel would take over Digital's Alpha processor fabrication plant in Hudson, Massachusetts. The chip giant would be obliged to manufacture the Alpha processor for several years.
According to analysts, Digital has incurred huge expenses from the Hudson chip plant, which has not been running at full capacity.
It is likely that a deal would result in Digital dropping the lawsuit it filed against Intel in May for patent infringement. Digital alleged that Intel stole Alpha's 64-bit technology for its own 64-bit technology, Merced, which is expected to ship in 1999. Digital was seeking damages running into billions of dollars.
An injection of cash from Intel would be a great help to Digital, which has suffered dwindling revenues. A formal statement has not been issued by the company regarding the possible licensing deal.
With Intel licensing the Alpha processor, the technology would be readily available to PC hardware companies. Intel's Slot 1 architecture for the Pentium II already caters for upgradable processor cards. Technology permitting, it could be possible to integrate an Alpha processor on a Slot 1 card.
But Hugh Jenkins, enterprise group product manager at Compaq, said his company wouldn't be interested even in an Intel Alpha machine. "The fundamental limiting factor (for the Alpha) is lack of application support," he explained.
"Almost no Windows NT applications run natively on Alpha. (Lack of applications) is such a big hill to climb. Why bother climbing it when you have Alpha-like performance today from Intel processors?" Jenkins added.
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