Intel slaps suit on Digital, may stop chip supply

After initially saying it would work with Digital despite that company's suit against it, Intel filed a separate suit yesterday demanding the return of confidential documents. This morning, an Intel spokesman said this morning that Intel is committed to providing Digital's PC business with microprocessors only through the third quarter of this year.

"[Processor contracts are] done a quarter in advance. We have contractual obligations through the third quarter on microprocessors," said Howard High, an Intel spokesman.

When asked whether Intel would continue to negotiate contracts with Digital past the third quarter, High said that "we negotiate each quarter at the appropriate time, and we would see what our opportunities are then."

Digital has staunchly maintained that the suit would not affect its business. "We have long-standing supply agreements with Intel and we will retain competitive access to Intel's X86 technology," Digital CEO Robert Palmer said in a letter to shareholders and customers.

But High said today that Digital's basic order agreement, which extends through 1999, does not cover microprocessors.

Intel's lawsuit, filed in U.S. District Court in San Jose, Calif., alleges that Digital refused to return Intel's property despite requests from the chip maker over the past week.

"We had a phone meeting with Digital yesterday to ask once more for these documents back. They refused to return the documents, and that resulted in the suit," High said.

Earlier this month, Digital, of Maynard, Mass., sued Intel, charging that the Santa Clara, Calif., company's Pentium, Pentium Pro and Pentium II processors violated 10 of Digital's patents. Intel denies those charges. Although both companies said at the time of Digital's suit that they would still work together, this latest suit appears to go against those statements.

High said that while Intel will still fulfil its contractual obligations to Digital, it is now exercising a clause in its contract that lets it demand the return of confidential documents, which can include specs and prototypes of chips and boards.

"When somebody's suing us, the thing we don't want to do is to provide a bunch of detailed advanced engineering to them. We want to retain that information to ourselves," High said.