Via initially unveiled the P4X266 at Taiwan's Computex trade show in early June. At the time, the chip set maker insisted that an older Intel cross-licensing agreement brokered by S3 Graphics, now a Via subsidiary, was applicable to future Intel buses.

Intel disagrees but has not clearly stated what action it will take against Via when the product pops up in the market. A few weeks ago, Intel chief executive officer Craig Barrett said any company introducing a product compatible with or using Intel's intellectual property should be "very careful" if it doesn't have a license.

The vague admonishments have been enough to scare off Taiwan's first-tier motherboard companies, such as Asustek, Gigabyte, Microstar International and Elitegroup Computer Systems. Of the four, only Elitegroup said it is ready to launch a board. "But the legal issue is holding us up," said Chen Sun-feng, a product and planning manager.

At this point, all of Taiwan's top board makers are going with Intel's regular DRAM offering for the P4 — the i845 — which will start to see volume shipments at the end of this month. In early 2002, Intel will launch the DDR version. There are still lingering concerns — mostly among second- and third-tier manufacturers — as to whether Intel can supply enough of the i845s, but none of the major players is worried enough to openly back Via's product at this early stage.

With no major vendors signing on yet, Via is busy working with the smaller suppliers to get a foothold. The company is betting a lot on the P4X266, which is the first P4 chip set to offer an alternative to Rambus. It is Via's major product launch for the second half, and analysts have said the company hopes it will account for 30 percent of sales by the end of the year. Via would not confirm those expectations during a press conference Wednesday, which focused much more on licensing issues than it did on the technology behind the product.

Early reviews of the chip set have been mostly positive, noting that its performance is nearly as good as Intel's i850, which supports only Rambus DRAM. In most benchmarks, the dual-channel i850 with its 3.2-Gbyte/second throughput usually outperforms Via's single-channel DDR266 chip set with its 2.1 Gbytes/s of bandwidth. But Via argues that its DDR chip set offers enough performance to satisfy mainstream users and can be linked with cheaper SDRAM.

Still, Via's major hurdle remains the license. The company's confidence that S3 Graphics is its insurance policy against an Intel lawsuit isn't going over well here. Moreover, some motherboard makers have pointed out that the S3 cross-licensing assertion doesn't hold up because the P4X266 doesn't use intellectual property (IP) from the graphics chip maker. Via will not release its integrated chip set — the P4M266 — for a few more months.

The lack of S3's IP in the discrete chip set means Via is really pushing the envelope on the cross-licensing deal, said Scott Thorton, a marketing manager with motherboard maker Abit. "It's pretty dicey. If it's not a true licensing agreement, then you'd be putting your company in jeopardy by using this solution," he said. "There is a whole feeling of uncertainty [about the license], and when there is this feeling, it is hard to come out strong with a new product."

At Gigabyte, the situation is much the same. "We are really confused and still have concerns," said Benson Chang, associate vice president of marketing. "We will still try to make the product ready as soon as possible, because that will not violate Intel. But as to whether we will sell the product, that is up to the license," he said. Asustek, a close motherboard partner of Intel, is also taking the same position.

Less than two years ago, the situation for Via was a stark contrast to Wednesday's launch. With strong market resistance to the Intel-Rambus linkup, Via was able to swoop in with its PC133 DRAM solution and clean up. The decision propelled Via into a billion-dollar-a-year company and made it one of Taiwan's high-flying IC design houses. "At the time, Intel didn't have the product and announced that it wouldn't have it. But the demand for PC133 was strong," said Chang. "But this time, Intel has a DDR solution for the P4, and it has already issued a bus license to two or three other chip set makers. So [Intel] can take strong action because it is ready."

Intel had no further comment to make about Via's launch of the P4X266, except to note that the company does not have a P4 bus license. Only four companies have the license: chip set makers Silicon Integrated Systems and Acer Labs, as well as ATI and ServerWorks Inc.

Via said it is shipping the P4X266 in volume but would not say to whom it is shipping. The company also expects demand to heat up once the integrated chip set is released, although at this point Via is not known for being strong in the integrated chip set area.

To allay concerns over the licensing issue, Via said it will cover any costs incurred by customers if Intel levies a lawsuit. "It's very clear though that it's really not in the industry's interest at all for us to get involved in a huge legal spat right now," said Richard Brown, Via's director of international marketing. "We provide the right products for the platform and by adopting us, [Intel] can help enable a faster transition to a P4 platform."

The snag over the license simply boils down to cost. Intel reportedly wants $10 to $20 per chip set in fees, which would be at least 30 percent of Via's selling cost, and perhaps up to 50 percent. The chip set is expected to initially sell for $30 to $40.