With the deal, Taiwan's ALI becomes the second company after ATI Technologies to officially announce a Pentium 4 licensing deal.
The licensing deals are geared toward ensuring that PC makers can obtain an adequate and inexpensive supply of components for Pentium 4 computers, which should soon start pushing deeper into the market.
Other licensing deals are in the works as well. ServerWorks, acquired by Broadcom, plans to manufacture a chipset for "Foster," a version of the Pentium 4 for servers that is coming in May, according to various sources. And Via Technologies, Intel's closest rival in chipsets, is also working on a Pentium 4 chipset, Via executives have said.
Although the Pentium 4 debuted in November, Santa Clara, Calif.-based Intel has not aggressively marketed it to date. But a 1.7GHz version of the Pentium 4 is coming in the second quarter, along with more price cuts and a $300 million advertising campaign.
If the processor is the boss within a computer, the chipset is the butler, endlessly executing the dirty work such as shuttling data to and from the memory banks or forwarding instructions to peripherals such as DVD drives.
"As Intel starts to make a major effort to ramp up the Pentium 4, they can't supply all of the chipsets...for all of the different (motherboard) designs and the different market segments," said Linley Gwennap, principal analyst for The Linley Group.
The chipsets from ALI, ATI and others also will likely allow PC makers to avoid using memory based on designs from Rambus, or RDRAM. Currently, Intel is the only company that makes a Pentium 4 chipset, and it works only with RDRAM, which costs more than other types of memory such double data rate DRAM.
The licensees are expected to make chipsets that can communicate with DDR DRAM, a faster version of standard memory, said Gwennap and other sources. Advanced Micro Devices began to couple its Athlon chip with DDR DRAM late last year.
Fred Leung, vice president at Acer Labs, would not say what memory will work with the company's chipsets. But he did say, "We are definitely biased toward DDR. We've put a lot of resources into DDR."
Intel itself won't come out with a non-Rambus chipset for the Pentium 4 until the third quarter, when it releases its "Brookdale" chipset.
The chip giant historically has reigned over the market for chipsets geared to work with its chips. By not initially licensing Pentium II chipsets, the company established a virtual monopoly for parts in the Pentium II heyday. But chipset shortages, combined with increased competition with AMD, led to licensing deals in 1998.
ALI signed a license with Intel in 1999, and subsequently manufactured Pentium II, Pentium III and Celeron chipsets.
"Given its unrivaled performance and functionality for the end user, Intel's Pentium 4 processor will have a positive impact in the global PC industry," Chin Wu, president of ALI, said in a statement. "Today's announcement emphasizes ALI's commitment to provide our customers with cutting-edge technology."