Digital and Intel have reached a $700 million compromise over their outstanding lawsuits that gives the chip giant new factories but not the Alpha processor.
Intel will pay $700 million to Digital for its semiconductor manufacturing operations but will not get the Alpha Risc chip for its money. Instead, all outstanding patent suits will be settled between the two companies and over the next 10 years both will cross license their technologies.
Under the terms of the agreement, Digital will keep its Alpha design teams while Intel will provide foundry capabilities for it.
Robert Palmer, president of Digital, said: ?This is a win-win agreement and we will be able to provide our customers all of the benefits of first class x.86 and 64-bit performance with a clear roadmap to the future.?
Craig Barrett, chief operating officer at Intel US, said: ?This agreement meets both companies? needs.?
But no details were given of other semiconductor technologies Digital is involved in, including network switching and the StrongArm network computer chip.
Intel, as well as swelling Digital?s coffers by $700 million, will provide it with products and technical support. This means that the Digital PC company can now breathe more easily.
The $700 million covers factories in Hudson, Massachusetts and Austin, Texas as well as a development team in Jerusalem. Staff surplus to Intel?s needs at these centres will receive redundancy money.
Other terms of the contract include Digital developing processors and systems based on the Intel IA-64 (Merced) processor and Digital porting Unix to that platform. That is bound to annoy Intel?s other main partner, Hewlett Packard. Intel will now have the rights to manufacture and sell other non-Alpha semiconductor products.
Said Joe D?Elia, senior semiconductor analyst at Dataquest UK: ?This is a very smart move on DEC?s part because it will retain the Alpha but Intel will have to foundry it. The question is how long DEC will continue to produce the Alpha if Merced rules the world.?
D?Elia also said the deal posed strong questions about where Digital will now foundry its StrongArm processor, licensed from Advanced Risc Machines (ARM), as well as all its networking products. The terms may imply that Intel will do this manufacturing, but that would fly in the face of the chip giant?s usual strategy.
The other question outstanding is whether the US government will allow the deal to go ahead. There is a pending Federal Trade Commission (FTC) case against Intel, partly prompted by Digital during its long summer of litigation.
Both Digital and Intel will ask for a stay of judgement on pending lawsuits, until US government approval is reached.
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