Intel settles patent case after VIA redesigns its chips

Intel Corp, the biggest computer-chip maker, agreed to settle a case with VIA Technologies Inc (威盛電子) over patent infringement claims related to chipsets that support rival Advanced Micro Devices Inc microprocessors, though a larger infringement case still remains.

The agreement was reached after VIA, the second-largest chipset maker, redesigned its products, Intel spokesman Chuck Mulloy said. Financial details of the case, which was filed in 1999 and scheduled to go to trial Jan. 22, will remain confidential, he said. Settlement of the 17-month-old dispute involved no money, VIA said.

The accord doesn't affect a separate lawsuit involving Intel's claims that VIA infringed on patents related to its Pentium 4 microprocessor. The dispute prompted motherboard makers not to buy VIA's latest chipsets.

"It's not positive news for VIA, especially when all the motherboard makers want Intel's new chipset," said Chiang Chih-hau, who manages NT$1.5 billion (US$43.5 million) in bonds and stocks at Barits Securities Investment Trust Co (倍利投信).

Intel started selling a new chipset in September for its Pentium 4 processor that uses standard memory chips, rather than those based on a Rambus Inc design.

Intel's agreement with VIA ends a fight centered on allegations that VIA used intellectual property from Intel's Pentium III in a chipset the Taiwanese company designed to support a processor from Advanced Micro. In the last month, federal judges decided that VIA didn't infringe on two Intel patents involved in the case.

Intel retains the right to bring "a new action," if there are apparent patent infringements in the future, Mulloy said.

In October, VIA cut its full-year profit forecast by 40 percent to NT$5 billion as computer motherboard makers such as Gigabyte Technology Co (技嘉科技) started using chipsets made by rival Silicon Integrated Systems Co (矽統科技). Silicon Integrated has a license from Intel to make chipsets for the Pentium 4.

"Our hope is that our differences with Intel regarding the Pentium 4 can be resolved short of protracted litigation, like the case we just won," VIA Chief Executive Officer Chen Wen-chi (陳文琦) said in an e-mailed statement. "Competition should be in the market place, not in the courtroom."

In its bid to transform the personal computer industry, VIA Technologies Inc (威盛) has faced challenges from all sides, including lawsuits from Intel and stiff competition at home from competitors like Silicon Integrated Systems Corp (矽統).

So far, VIA has been able to overcome these obstacles and grow at a phenomenal rate, last year reporting a 174 percent increase in revenue over 1999. In just one year, VIA jumped from being a US$350 million a year company to a US$1 billion a year firm, as a result of what Marketing Director Richard Brown called "a culmination of years of research and hard work."

VIA accounts for over a third of the world's US$3 billion market for computer chipsets. The firm plays second fiddle worldwide only to California-based Intel.