Intel Corp sued rival VIA Techno-logies Inc, saying the No. 2 computer chipset seller infringed its Pentium4 microprocessor patents.
Intel, the biggest maker of computer chips and chipsets, says VIA infringed five of its patents by unlicensed selling of chipsets that may be used with Intel's Pentium4 family of microprocessors. Chipsets control the flow of data between the processor and other parts of the computer.
"A chipset vendor can realize significant commercial benefit if it is able to state that its products are licensed under Intel's patents," Intel said in a complaint filed in federal court in Wilmington, Delaware.
Taipei-based VIA has 40 percent of the US$3 billion global chipset market after doubling its market share in less than three years. Via boosted its market share after Intel failed to make enough chipsets to meet demand, a mistake analysts say the company won't repeat.
Intel said it has denied VIA a license to sell Pentium4 chipsets. VIA's director of international marketing Richard Brown declined to comment, though he said the company may issue a statement in response to Intel's allegations next week.
Chen Wen-chi, VIA's chief executive, said at a news conference earlier this week that the company is "not aware of any wrongdoing" with regards to its use of Pentium4 technology.
Intel was issued the five patents between 1997 and 2000. The company is asking a judge to bar Via from making Pentium4 chipsets and to award damages and legal fees.
The Santa Clara, California-based company also accused Via of patent infringement in another suit filed in June 1999. The dispute was settled out of court with VIA paying Intel an undisclosed sum of money.
Chris Hsieh, an analyst at ING Barings Securities Ltd in Taiwan, said that if Via reaches a settlement with Intel over the use of Pentium4 technology its margins may shrink by up to 20 percent.
"The company is really at a crossroads," Hsieh said in an interview earlier this week. "Global PC shipments aren't exciting. Competition is tough. Intel Corp has ample chipset capacity."
VIA's second-quarter net income fell 41 percent to NT$1 billion (US$29 million) from a year earlier.
Worldwide personal-computer shipments are expected to decline about 1.6 percent this year, the first such decline since 1985, as demand slows in the US and Japan, a research report said.
The shipments will reach 129.6 million units, compared to 131.7 million in 2000, according to the report by International Data Corp.
Silicon Integrated Systems Ltd and Acer Laboratories Inc, two Taiwan chipset designers, have licenses from Intel to sell chipsets based on Pentium4.
VIA shares yesterday rose 0.9 percent to NT$108.50. The stock is down 4.6 percent this year. Intel's shares fell 0.8 percent on Friday to NT$25.89 and have declined 14 percent this year.
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