Intel issues legal threat against VIA

An Intel Corp executive yesterday threatened legal action if Pentium 4-compatible chipsets made by VIA Technologies Inc (威盛) hit the market without approval from Intel.

"If [VIA] is able to acquire Pentium 4 motherboards compatible with its P4x266 chipsets, we will take legal action," local media quoted Chen Chun-sheng (陳俊聖), Intel's Asia-Pacific CEO, as saying in an interview published yesterday.

Intel officials in Taipei confirmed the report, adding that Chen was only echoing statements made by Intel CEO Craig Barrett during his visit to Taipei last month. They also said Intel and VIA are in ongoing discussions over a Pentium 4 license for the chipset, but have not yet found "a fair exchange of value."

Chipsets act as a central nervous system for computers, controlling the flow of data between the CPU and other chips.

In order to make chipsets and other technology compatible with Intel's new Pentium 4, companies must first negotiate a licensing agreement. Two Taiwanese firms, Acer Labs Inc (揚智) and Silicon Integrated Systems (SIS, 矽統) have already obtained licenses, but VIA has not -- repeating a pattern of legal bickering with Intel that began last year.

Last year, VIA won two major battles against Intel, winning nearly 40 percent of the world market for chipsets and helping Advanced Micro Devices (AMD) win market share in the CPU business.

Delays on Intel's own 820 series chipsets and their pairing with expensive Rambus memory chips gave VIA an opening, and VIA never looked back. VIA launched chipsets for use with PC-133 memory chips, much less expensive than Rambus. To add insult to injury, VIA's chipsets helped AMD beat Intel to the punch with a 1 Gigahertz CPU, which won market share for Intel's largest rival.

Unable to beat VIA in the market, Intel fought back in the courts, suing VIA for making Pentium 3 chipsets without a license. Intel won a settlement in the US last year, but the terms were not disclosed.

Now, Intel is back and firing on all pistons in its drive to take back CPU market share from AMD and put Intel chipsets back into computers at the expense of VIA.

The situation looks bleak for both AMD and VIA. Intel plans to explode a "price bomb" at the end of this month to boost sales of its Pentium 4 CPU, slashing prices of its chips by as much as 45 percent. In addition, Intel will launch a new chipset at the end of this month, the 845 "Brookdale" chipset, to connect Pentium 4s to less expensive memory chips. Intel has also so far refused a Pentium 4 license for VIA.

VIA officials maintain they have the right to produce chipsets for Pentium 4 products based on a complex cross-licensing agreement set to last another eight years. The company claims its stake in US-based S3 Incorporated gives it the right to use licenses held by S3 with regard to Intel intellectual property. This translates to free reign in developing products for Pentium 4.

Intel disagrees and appears to be targeting motherboard makers as well as VIA in its bid to keep VIA's P4x266 chipsets off the market -- a tactic that worked during the Pentium 3 courtroom shootout. Taiwan motherboard makers are spooked.

"We don't have any plans to develop VIA (Pentium 4 chipset) compatible motherboards," said an executive at one of Taiwan's largest motherboard makers. He said his company plans to use Intel 845 chipsets only, at least for now.