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- FTC gives OK to Digital/Intel chip deal
- (04/23/98, 6:13 pm ET)
- By Margaret Kane, ZDNN and Lisa DiCarlo, PC Week Online
-
- 
- The Federal Trade Commission today gave conditional approval to
- Digital Equipment Corp.'s (DEC) sale of its microprocessor
- operations to Intel Corp. (INTC)
-
- The approval requires Digital to agree to continue licensing
- arrangements with Advanced Micro Devices Inc. and Samsung
- Electronics Co. Ltd. and to certify IBM Microelectronics or some
- other company to manufacture Digital's Alpha processors.
-
- Digital spokesman Dan Kaferle said the company has been in
- preliminary discussions with IBM about a manufacturing deal but
- had not reached an agreement. He added that Digital was not in
- any other discussion regarding an Alpha foundry.
-
- The two companies will work to close the deal as quickly as
- possible, he said.
-
- Harry Copperman, an executive vice president at Digital, said
- as recently as late last month that the company was seeking a
- third Alpha foundry.
-
- The purpose of the requirements is to ensure that companies
- other than Intel can produce the chip. The FTC had expressed
- concern that the agreement between Digital and Intel was
- "likely to create uncertainly regarding the future competitive
- viability of Alpha," given Intel's dominance of the processor
- market.
-
- The two companies agreed to the sale of Digital's manufacturing
- operations last October as part of a settlement regarding patent
- disputes. At the time, many industry observers questioned whether
- Intel would seriously support Alpha given the competitive
- landscape and the fact that the Santa Clara, Calif., company is
- developing its own 64-bit architecture, code-named Merced.
-
- The FTC said today that its consent provisions "would ensure that
- Alpha remains a viable competitive alternative to Intel's chips."
-
- In February, Digital, of Maynard, Mass., agreed to license Alpha
- to Samsung. It had previously agreed to license the bus design
- for the Alpha [21264] to AMD, which will use the process in its
- K7 processor.
-
- AMD now has access to Alpha patents and designs and also has the
- right to manufacture Alpha.
-
- "The IBM and AMD [provisions] don't change the deal", said Intel
- spokesman Chuck Mulloy. "We have no control over Alpha at all."
-
- As an aside, the StrongARM part of the deal passed without
- conditions.
-
- "We are in a position to put [StrongARM] design teams to work",
- Mulloy said.
-
- The agreement will be subject to a 60-day comment period, after
- which the FTC will decide whether to make it final.
-
- In related news, Compaq CEO and President Eckhard Pfeiffer said
- this week he expected the FTC to approve Compaq's acquisition of
- Digital "within a few days" and that the deal would close in
- "early June" following shareholder approval.
-
- Additional reporting by John Dodge 
-
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-
- Federal Trade Commission Approves Digital-Intel Deal
- (04/23/98, 8:13 pm ET)
- By Kelly Spang, Computer Reseller News 
-
-
- The Federal Trade Commission approved the settlement between
- Digital Equipment and Intel, but added its own modification to
- protect the future of Digital's Alpha processor.
-
- As expected, the FTC said Thursday it would not block the
- settlement, but the Commission also did not outright approve the
- proposed deal. The commission voted five-to-zero to accept the
- consent agreement.
-
- The settlement, announced in October after six months of legal
- battles, provides that Intel (company profile) would buy Digital
- Semiconductor's manufacturing facilities for $700 million.
- Although Digital (company profile) will retain its Alpha design
- team, and control over the Alpha technology, under the deal,
- Intel would serve as a foundry for the Alpha processor. 
-
- It is Intel's hand in the Alpha pot that concerned the FTC.
-
- As a condition of its approval of the deal, the FTC is requiring
- Digital license its Alpha technology to other semiconductor
- manufacturers beyond Intel. In particular, the commission named
- Advanced Micro Devices and Samsung Electronics as potential
- Alpha licensees. 
-
- In February of this year, Digital announced it would give
- Samsung Electronics an Alpha architectural license, allowing
- Samsung access to Alpha intellectual property, including patents
- and future implementations, so the semiconductor maker could
- develop its own line of Alpha products. 
-
- In addition, Digital is also required to certify IBM or other
- "commission-approved" companies to produce Alpha chips as an
- alternative source to Intel's production, according to the FTC.
-
- "The commission's order is designed to ensure that Alpha remains
- a viable competitive alternative to Intel's chips, by sending a
- strong message to the market that other major chip makers are
- now committed to Alpha's future," said chief executive Robert
- Pitofsky in a prepared statement. "By protecting competition,
- the commission has preserved consumer choice, and encouraged
- innovation in the market for microprocessors." 
-
- The sale, as outlined by Maynard, Mass.-based Digital and Santa
- Clara, Calif.-based Intel, would have threatened competition by
- placing Alpha solely in Intel's hands, according to the FTC.
- Because Intel is Digital's largest competitor for micro-
- processors, the FTC determined the sale, as originally proposed,
- would threaten the future development of Alpha, according to the
- commission's statement. 
-
- Also, as part of the settlement, the two companies reached a
- 10-year patent cross licensing agreement, and Digital committed
- to port its 64-bit Unix operating system to Intel's IA-64
- architecture, as it becomes available.  
-
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