August 25, 1997 5:50 PM PDT
Exponential patents buyer undisclosed
The price paid likely exceeded $5.1 million, said former employees, as that was the high bid figure in a preliminary auction the week before.
Exponential's patents have become a much-desired prize in the semiconductor universe since the company announced that it would sell its intellectual property to pay off its debt.
The Exponential patents lay out a blueprint for a chip that can understand both CISC and RISC instruction sets: such a chip would allow a single computer to understand programs written for both Intel and PowerPC computers, respectively. Understanding both CISC and RISC is also the goal of the Merced chip, the next-generation processor being developed by Intel and Hewlett-Packard, which is covered by several other patents. (Intel is an investor in CNET: The Computer Network.)
Exponential, however, filed for its various patents first, giving those plans status as "prior art" over the Merced patents, said Rich Belgard, a consultant with The Microprocessor Report. As prior art, the Exponential patents can supersede Intel's patents in the event that the patents are similar or cover similar processes. Many of the patents, Belgard added, are very similar.
By buying the patents, Intel could stave of any legal challenges to the Merced. On the other hand, the patents could give competitors such as Digital and Advanced Micro Devices leverage against the giant chip maker.
Chip makers aren't the only ones who will benefit from the auction. The once-promising semiconductor maker stiffed employees for back pay and expenses when it shut down operations earlier this year. Its demise occurred when Apple said it would not use the Exponential X704 chip in its computers. The situation between employees and former management has as a result become extremely acrimonious.
Close to 20 companies, including Intel, Digital, AMD, Cyrix, and S3 participated in the initial round of bidding, which took place August 15. The preliminary auction yielded a high bid of $5.1 million, said former employees.
A second round of bidding, involving the first-round winner and the closest competitors, took place last Friday. Although participants could have chosen to bid some, or all, of the patents, one party bought them all, said Stephanie Dorris, Exponential's CFO.
"It was Intel or someone else," said a source close to the auction.
While declining to state the amount the auction netted or the identity of the buyer, Dorris said that the amount received will not cover all of Exponential's debt, which various sources estimate to be around $10 million.
The proceeds from the auction will go to pay off remaining secured creditors and then ex-Exponential employees, she said. "There was not enough to cover the total debt," she said, "but from the standpoint of the employees they will probably be taken care of. They are our first priority."