US Report: FTC gives OK to Digital/Intel chip deal

The Federal Trade Commission yesterday gave conditional approval to Digital's sale of its microprocessor operations to Intel.

The approval requires Digital to agree to continue licensing arrangements with Advanced Micro Devices(AMD) and Samsungand to certify IBMor some other company to manufacture Digital's Alpha processors.

A Digital spokesman said the company has been in preliminary discussions with IBM about a manufacturing deal but had not reached an agreement. He added that Digital was not in any other discussion regarding an Alpha foundry. The two companies will work to close the deal as quickly as possible, he said. Harry Copperman, an executive vice president at Digital, said as recently as late last month that the company was seeking a third Alpha foundry.

The purpose of the requirements is to ensure that companies other than Intel can produce the chip. The FTC had expressed concern that the agreement between Digital and Intel was "likely to create uncertainty regarding the future competitive viability of Alpha", given Intel's dominance of the processor market.

The two companies agreed to the sale of Digital's manufacturing operations last October as part of a settlement regarding patent disputes. At the time, many industry observers questioned whether Intel would seriously support Alpha given the competitive landscape and the fact that the company is developing its own 64-bit architecture, code-named Merced. The FTC said today that its consent provisions "would ensure that Alpha remains a viable competitive alternative to Intel's chips".

In February, Digital agreed to license Alpha to Samsung. It had previously agreed to license the bus design for the Alpha 212164 to AMD, which will use the process in its K7 processor. AMD now has access to Alpha patents and designs and also has the right to manufacture Alpha. "The IBM and AMD [provisions] don't change the deal,'' said an Intel spokesman. "We have no control over Alpha at all."

As an aside, the StrongARM part of the deal passed without conditions. "We are in a position to put [StrongARM] design teams to work,''the Intel spokesman said. The agreement will be subject to a 60-day comment period, after which the FTC will decide whether to make it final.