Samsung snags $500 million Compaq chip deal

Compaq Computer has chosen Korea's Samsung Electronics to manufacture its newest Alpha processor in a deal worth $500 million.

The two companies will work together to expand the market for the Alpha chip, including further joint investments in marketing and development of the processor.

The investment by Compaq, Alpha Processor Incorporated (API) and Samsung will extend Alpha's position in enterprise environments including a significant focus on e-business technology. It will also expand Alpha into new markets such as fixed-function servers, network appliances and Internet network infrastructure, the companies said.

The agreement comes amid speculation by analysts and computer industry experts that Compaq is considering licensing the Alpha design to IBM as well.

A Compaq spokesman declined to comment on possible talks with IBM, although he said today's agreement doesn't preclude Compaq from licensing the Alpha design to other manufacturers, Bloomberg reported.