Tue, Nov 02, 1999 page18

• Suit targets First International

  LITIGATION Chipmaking giant Intel has widened its legal dispute over chipsets with VIA Technologies to include affiliates, such as First International Computer

  • By Simon Burns / STAFF REPORTER
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  US chipmaking giant Intel Corp has filed a lawsuit against First International Computer (FIC), one of Taiwan's largest manufacturers of computer motherboards, according to US press reports.

  Lawsuits filed in the US, UK and Singapore also name FIC affiliate Everex, a US-based maker of computer systems.

  The suits appear to be based on the two companies' use of chips designed by Taiwan-based VIA Technologies. VIA, FIC and Everex all have ties to the giant Formosa Plastics Group (FPG) and the Wang family, which controls FPG.

  FIC supplies motherboards to several major PC makers, including Compaq.

  An FIC spokesperson tried to distance the firm from VIA, describing VIA as "totally independent from FIC." However, a VIA executive said the two companies were both part of the same group.

  Andrew Lin, of Jardine Fleming Securities, questioned Intel's motives, suggesting that the chipmaker was targeting VIA's affiliates to put pressure on VIA while ignoring other companies that use the chipsets. He said he does not expect the suit to be successful.

  For the past year, VIA and Intel have been arguing over VIA's use of patented Intel technology in two of its chipsets. Intel dominates the market for chipsets, which are key component of all PC motherboards.

  The two companies signed a technology licensing agreement at the end of last year, but within months Intel claimed in a letter to motherboard makers that VIA was violating the terms of that agreement. In July, Intel filed suit against VIA in the US. That case is still unresolved.

  Intel would not comment on the case yesterday.

  Staff in FIC's marketing department seemed bemused by the unexpected action. The US company had not contacted FIC about the suit, marketing specialist Annie Tsai said. Instead, FIC had learned of the action from an Internet news site.

  Other Taiwanese motherboard makers who use the disputed VIA chipsets said they had not been contacted by Intel and had not heard about the new lawsuit.

  Acer affiliate, Aopen, makes several thousand motherboards each month with the chips, less than 10 percent of its total output, marketing manager Tony Yang said. In view of Intel's concern, Aopen's promotion of this product has always been low key, but the company would probably continue production, Yang said.

  "I'm confused by this," said Ted Lee, VIA's sales director, "We deliver our chipset under a license agreement [with Intel]. Before the lawsuit with Intel, we followed the Intel agreement and also paid a royalty to Intel. I believe the chip is already covered by the previous contract."

  VIA had also taken the precaution of contracting National Semiconductor to make the disputed chipsets, Lee said. National has a cross-licensing deal with Intel which lets the two US companies use each others' patented technology.

  Lee described Intel's motivation for its action against FIC and Everex as a "marketing issue." Intel's newest chipset, the 820, had "big problems" relating to its use of a new type of memory, Lee said. He contrasted this with VIA's "successful" introduction and mass production of its latest chipset.

  "Currently I think Intel's chipset group faces a big challenge because VIA is quite successful in promoting the new generation chipset. So I think it's more a kind of marketing strategy to try to impact our customers, to stop our momentum."

  Local motherboard maker, Shuttle, which uses the disputed chipset in several thousand motherboards per month, might consider withdrawing these products from the market if initial reports of the lawsuit proved accurate, Assistant Vice President Jonathan Yi said.

  However, Lee stressed that VIA saw Intel as a partner, not a competitor, and needed to cooperate with the much larger US company, particularly in the CPU market. VIA is expected to announce a new chipset with integrated 3D graphics today, developed in cooperation with graphics chip designer S3 Inc.
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