Cyrix breaks Pentium II monopoly

Cyrix today said that it may break Intel's hammerlock on the Pentium II architecture, opening up this huge market for competing chips.

Cyrix affirmed that it has the rights to the plans and other intellectual property necessary to make processors based around Intel's heavily guarded Pentium II design.

While Cyrix will not be in a position to make Pentium II-style chips until late 1998, its rights to the Pentium II architecture effectively means that Intel could face more competition in the high-end desktop arena because a second manufacturer now has the right to build Pentium II chips.

Cyrix's right to build the processor comes as a result of its acquisition by National Semiconductor, said Steve Tobak, vice president of corporate marketing at Cyrix. National has an extensive cross-licensing agreement with Intel, which was transferred to Cyrix when the National deal closed earlier this week.

"The National cross-license is broad with Intel," Tobak said. "We talked to our lawyers and they said it would not be a problem. It is very doable."

"We will not comment except to say we will acknowledge that there is a cross-license between National and Intel," said an Intel spokesman today.

Other industry sources familiar with development say that Cyrix's rights are dependent on whether Cyrix's patents become a part of National Semiconductor's portfolio. In order for Intel to go along, according to these sources, the cross-licensing deal will have to give Intel access to Cyrix's intellectual property.

Intel's latest chip--with its proprietary architecture--has thus far radically changed the competitive landscape in the processor arena. The Pentium II uses a "Slot 1" design and a proprietary system data path, or bus, that are incompatible with the older Pentium "Socket 7" design of chips made by Cyrix and Advanced Micro Devices.

As a result, Cyrix and AMD are forced to compete in the "lagging-edge," lower-profit Pentium market.

All major PC vendors, including Dell Computer, Compaq, Gateway 2000, IBM, and Hewlett-Packard are moving their PC lines across the board to the Pentium II chip.

Cyrix's potential rights to the Pentium II designs were first reported by CNET's NEWS.COM in October. Cyrix indicated that the possibility to make Pentium II chips under the National license existed, but said it could not be certain until the National acquisition was complete. Chuck Mulloy, a spokesman for Intel, then said that Cyrix's rights under the cross-license could not be determined until the merger was completed.

Tobak said that Cyrix is the only company that he knows of which can obtain a license to make Pentium II chips. He was unsure if National could assign rights under the cross-license to other chip manufacturers.

Intel took specific precautions to ensure that the Pentium II designs could not be pirated or easily re-engineered, analysts and Intel spokesmen have said. Both AMD and Cyrix were able to make older Pentium-class chips through re-engineering. AMD was able to get an official license for Pentium chips recently.

Ironically, the rights to the Pentium II designs come from a relatively ancient cross-license. The National cross-license was signed in the 1980s, well before the Pentium II was released and well before National acquired Cyrix, according to sources at National.

Although the license will ostensibly allow Cyrix to make processors that are compatible with Pentium II computers and PC circuit boards, Tobak said it has not been decided whether the company will in fact make Pentium II style chips. Either way, Cyrix will not be in a position to release a more advanced chip based on either design until late 1998 or early 1999.

Cyrix in fact is trying to devise its own Slot-style chip. While this would make it more difficult for computer OEMs to adopt a Cyrix chip, the company would not have to worry about Intel's plans as much.

"If we follow Intel, we have to go to Slot 1, then we have to go to Slot 2."

Asked if Intel has acknowledged Cyrix's rights, Tobak replied, "They haven't said, 'Go forward with our blessings,' but we aren't expecting it," adding "Slot 1 will not be a problem."