Advanced Micro, Intel Plan Cross-Licensing Agreement

Dow Jones News Service

October 9, 1981

SANTA CLARA CALIF -DJ- TWO CONTENDERS IN THE BATTLE FOR SEMICONDUCTOR MARKET SHARE ARE PREPARING TO ANNOUNCE A NOVEL AND FAR-REACHING ACCORD FOR POOLING THEIR RESEARCH AND DEVELOPMENT RESOURCES.

THE 10-YEAR CROSS-LICENSING AND TECHNOLOGY EXCHANGE AGREEMENT IS BETWEEN INTL CORP. AND ADVANCED MICRO DEVICES INC. THE PACT IS BUILT AROUND INTEL'S 8086 FAMILY OF MICROPROCESSORS AND ADVANCED MICRO'S PERIPHERAL DEVICES. BUT THE INTEL-ADVANCED MICRO ALLIANCE COULD GO EVEN FURTHER CONTEMPLATING FUTURE JOINT DEVELOPMENT OF CHIPS MADE WITH DIVERSE TECHNOLOGIES. FUTURE AREAS OF COOPERATION MAY INCLUDE SOFTWARE SUPPORT DESIGNED BY INTEL AND TELECOMMUNICATIONS PRODUCTS BY ADVANCED MICRO.

ADVANCED MICRO ALSO WILL HAVE AN OPPORTUNITY TO OBTAIN A LICENSE TO MANUFACTURE AND MARKET THE NEWEST ENTRY TO INTEL'S ARSENAL THE IAPX 432 'MICROMAINFRAME ' WHICH IS A MAINFRAME COMPUTER BUILT AROUND THREE SUPERPOWERFUL CHIPS. THIS WOULD OCCUR WHEN INTEL'S SALES OF THE DEVICE REACH A CERTAIN LEVEL.

ADVANCED MICRO'S CHAIRMAN W.J. JERRY SANDERS HAILED THE PACT AS 'A NEW WAVE OF INNOVATIVE TECHNIQUES FOR IMPROVING R&D EFFICIENCY.' DEVELOPMENT COSTS OF SOPHISTICATED MICROPROCESSORS HAVE SURGED TO BETWEEN $1 MILLION AND $2 MILLION FROM $100 000 IN THE PAST DECADE.

THE 16-BIT MICROPROCESSOR THAT IS AT THE HEART OF THIS AGREEMENT IS EXPECTED TO SELL 1.1 MILLION UNITS IN 1981 AND 10 MILLION UNITS IN 1985.

BUT STRATEGIC PRODUCT PLANNING FOR THE FUTURE ALSO IN ENVISIONED. 'WHAT WE'RE SAYING ' AS ADVANCED MICRO SPOKESMAN SAID 'IS THAT OUR R&D GUYS WILL SIT DOWN AT A TABLE WITH THEIR R&D GUYS AND DECIDE WHAT NEW PRODUCTS NEED TO BE MADE AND WHO WILL MAKE THEM.'

ALSO BY AUTHORIZING ADVANCED MICRO AS A LICENSED 'SECOND SOURCE ' INTEL ENSURES THAT THE VERSIONS OF ITS 8086 BEING MARKETED ARE PRODUCED EXACTLY ACCORDING TO ITS SPECIFICATIONS. THIS SUGGESTS A DEFENSE AGAINST THE COMMON PRACTICE OF 'REVERSE ENGINEERING' BY UNLICENSED COMPETITORS. REVERSE ENGINEERING IS THE PROCESS BY WHICH A COMPANY COPIES A CIRCUIT DESIGN BY ENLARGING A FINISHED ORIGINAL. BOTH MITSUBISHI AND NIPPON ELECTRIC CORP. HAVE ANNOUNCED THEIR INTENT TO PRODUCE THE 8086 WITHOUT THE BENEFIT OF A LICENSE.

Copyright (c) 1981, Dow Jones & Co., Inc.