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Via takes on Intel with Cyrix buy

Taiwan's Via Technologies and Silicon Valley's National Semiconductor announce that Via will acquire National's Cyrix chip business.

Tech Industry
Taiwan's Via Technologies and Silicon Valley's National Semiconductor today announced that Via will acquire National's Cyrix chip business.

As previously reported, the deal will go a long way toward fulfilling the strategic goals of both companies. It could also add to the melodrama that is the microprocessor marketplace. By buying the Cyrix division, and signing a manufacturing deal with National, Via, which makes its money from chipsets, could potentially release a processor in the form of an Intel Celeron clone. That's a competitive but potentially more lucrative market than chipsets.

Financial terms of the deal were not disclosed. The companies said they would provide further details about the structure of the transaction over the next few months.

Via said it intends to continue developing and marketing Cyrix CPUs.

Via is also not Intel's favorite company. On Friday, it was revealed that Intel revoked a licensing deal with Via and filed a patent-infringement suit against the company.

National has publicly been looking for a buyer for Cyrix since May 5 when it announced it wanted to bow out of the microprocessor business and sell a majority interest in its South Portland, Maine-based fabrication facility.

Unfortunately for National, buyers have been tough to come by, in part because of a punishing price war in PC microprocessors. Cyrix has not been profitable for several quarters, National executives admitted. potential candidates such as IBM and Taiwan Semiconductor Manufacturing did not show much interest, said various sources, although these companies are potential candidates for buying the Maine facility. Executives at Cyrix competitors said National's initial asking price for Cyrix was relatively high. Earlier this month, some analysts believed that National would have to write the division off as a loss on its balance sheet.

In a recent conference call, National said it had imposed a deadline of June 30 for selling Cyrix or writing it off. The sale just met the deadline.

A deal between Via and National steps around the legal difficulties that Via currently has with Intel. By buying Cyrix, Via would acquire the intellectual property and an engineering team for building microprocessors. Prior to National's decision to sell Cyrix, the company had been planning to come out with a chip that would be compatible with Intel's Celeron processor.

A license to speed
As the buyer of Cyrix, Via can move relatively quickly into that market, said Nathan Brookwood, a consultant for Insight 64. The sticking point has been that any manufacturer should also try to get a licensing deal with Intel or have these chips made in a fabrication facility licensed by Intel.

Via had only a limited licensing agreement with Intel and that has been revoked. National, by contrast, had a wide-ranging cross-licensing agreement that allowed it to manufacture Intel clones. And, although it is selling some of its fabrication facility, it will retain a minority interest in it.

Potentially, National could manufacture the clones for Via. In addition, IBM and others can serve as contract manufacturers for a Via processor.

Via also brings the advantage of speed. "Via is a company that is very quick on its feet," said Brookwood. Quickness, in fact, is part of the problem. Earlier this month, Via rolled out a 133-MHz chipset for inexpensive computers. Not only is this slightly faster than Intel alternatives, sources say it went beyond the Intel licensing deal.

A Cyrix executive said earlier that the Via negotiations did not include a stake in the Maine facility, just the Cyrix division. National will continue to try to sell the facility to other chip companies, sources said.

News.com's Sandeep Junnarkar contributed to this report.

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