In a newfound spirit of cooperation, Intel Corp. is turning to third-party chipset vendors to fill a competitive void by supplying the processor giant with core-logic chipsets. But how long will the goodwill last?
Saddled with a contractual clause that prohibits it from making double-data-rate SDRAM-enabled chipsets, Intel is leaning on Taiwan's IC makers to help it fend off a challenge from Advanced Micro Devices Inc., Sunnyvale, Calif. AMD, which has no such restrictions regarding its choice of memory technology, is also tapping Taiwan's independent IC makers in an effort to gain market share for its Athlon MPU.
Intel's sudden switch became apparent last month when the company abruptly settled a longstanding legal dispute with Taipei-based Via Technologies Inc., and granted the company a bus license that allows it to build DDR-enabled chipsets for the Pentium III and Celeron. That followed earlier, similar license deals with Acer Laboratories Inc. (ALI) and Silicon Integrated Systems Inc., also of Taipei.
Despite the detente, Via last week said it is prepared to introduce an unlicensed DDR SDRAM chipset to support Intel's upcoming Pentium 4, a move that once again may force Intel to adopt a defensive posture. Via followed the same path relative to its unauthorized support of the Pentium III, which led to a series of lawsuits that ultimately ended with last month's settlement and license deal.
Interviewed last week at a conference in San Jose concerning its apparent willingness to provoke Intel, Via's director of product marketing, Eric Chang, would say only that, "The future has a way of repeating itself."
A spokesman for Intel, Santa Clara, Calif., denied the licensing deals with Taiwan's chipset makers were prompted by the company's agreement with Rambus Inc., which authorizes Intel to support Direct Rambus DRAM in its processor line, but bars support for DDR SDRAM. He acknowledged, however, that through third-party chip vendors like Via, OEMs are able to work around Intel's decision not to field a DDR chipset.
The decision to back Rambus has cost Intel ground in the chipset market, where as recently as 18 months ago it held more than an 80% share, according to analysts. In a poll last week, Taiwan's motherboard manufacturers generally reported that Intel's Rambus-enabled 820 and 840 chipsets have yet to gain wide acceptance with board makers and contract PC assemblers.
"Sticking to Rambus in the past has cost Intel a huge share in the chipset market," said a Via spokesman, adding that in the future, "We'll see more and more companies endorse DDR."
Via is expecting to become the world's largest chipset manufacturer by the end of the year, rising from a 40% share now to more than half of the market, the company said. Analysts predict that Intel's share will probably fall from 45% to 30% during the same period.
"Intel must rely on Taiwan for DDR chipsets while the company focuses on defending its market share in processors," said Liu Chi-tung, an analyst at UBS Warburg Securities Co. Ltd. in Taipei.
Despite Intel's comments to the contrary, observers say the company's predicament stems from its contract with Rambus, Mountain View, Calif., which gives the chip maker rights to Direct Rambus DRAM but restricts it from supporting any rival high-speed memory technology for the next three years. Rambus can terminate Intel's Direct RDRAM license if the company moves to make chipsets that support non-Rambus memory with a bandwidth of 1 Gbyte/s or more-a ban that clearly encompasses the 1.6- to 2.1-Gbyte/s performance of DDR SDRAM.
Specifically, two clauses in Intel's 1997 licensing agreement allow Rambus to terminate the accord if Intel introduces a high-performance chipset other than Direct Rambus. According to the contract, Rambus can void the license if "Intel communicates to any of the then current top 10 DRAM manufacturers that Intel has plans to support, as the primary DRAM for PC main-memory applications for the years 2000, 2001, and 2002, any [new] interface other than the [Direct] Rambus [interface]."
The license can also be canceled if "Intel does not represent [to Rambus] that [Direct] Rambus DRAM will be the primary DRAM for PC main-memory applications for the years 2000, 2001, and 2002."
The market will now be watching closely to see what approach Intel takes toward DDR support for its upcoming Pentium 4 desktop processor. The company so far is adamant that the Pentium 4 will use its internally developed Tehama chipset, which only supports Direct RDRAM. To date, Intel has also refused to license the Pentium 4 bus technology to third-party chipset vendors.
Still, it didn't take long for Via to break with the new peace. Speaking at the Platform 2000 conference in San Jose last week, Chang said the company will introduce a DDR-enabled chipset for the Pentium 4 with or without a license from Intel. Chang added that once Via has a DDR chipset supporting Willamette, it further expects to develop a DDR-enabled IA-32 chipset for Intel's next-generation Foster processor for the enterprise-server segment. Via is also expected to unveil DDR-equipped chipsets for the notebook market that support both Intel and AMD processors.
When contacted, ALI executives said the company is also considering developing a DDR chipset for the Pentium 4. The executives said ALI hopes to build the device under an Intel license, but wouldn't say if the company would develop the chipset regardless.