Cyrix claims rights to Pentium II, Slot 1 secrets

Microprocessor rival Cyrix is claiming that its upcoming merger with National Semiconductor will give it access to much of the highly guarded intellectual property surrounding the Pentium II chip through a licensing agreement that predates the existence of the chip itself, sources said.

Steve Tobak, vice president of corporate marketing, said a shift to Slot 1 is feasible, but would not confirm whether the company has decided to move in that direction.

"We certainly have the technology to implement Slot 1 and the IP [intellectual property] issues may not be prohibitive," he said. "We are looking at it. We're looking at a number of different options.

"The National cross-license certainly doesn't hurt," he added.

"Slot 1" and the P6 bus are, respectively, the physical and electrical means the Pentium II uses to connect to the rest of the computer. The technology, claim observers, gives Intel a huge competitive advantage because no one else currently has an equivalent connection.

"On its face, they may be able to get the rights to Slot 1," said Richard Belgard, a consultant with MicroDesign Resources. "The P6 bus patents are known. The problem [currently] is they do not have the rights to it."

Chuck Mulloy, Intel spokesman, confirmed the existence of the National cross-license and Cyrix's claim, but declined to comment on their strength.

"There is a potential, that's true, but it wouldn't be a done deal anyway until the acquisition goes through," he said. "There is a cross-license, but there are many variables." Still, he added, "It will be a consideration."

Cyrix's claims to the Slot 1 rights seem to have emerged as an accident of history. National and Intel entered into a number of cross-licensing patents regarding semiconductors years ago. Sources indicated that the agreements are thought to be broad, covering current and future X86 microprocessor patents. Although it has had rights from Intel, National has not been active in X86 production.

Following these agreements, Intel developed the Pentium II and the P6 bus. Rather than use the "Socket 7" design of the Pentium I, Intel came up with the Slot 1 design, a shift that carries enormous implications in the marketplace.

Not only can Slot 1 chips run at faster speeds and more efficiently than Socket 7 chips, but also the chip's different design has forced computer makers and board manufacturers to make special boards and computers for the chip. That redesign has, to date, held the potential to lock out competitors such as AMD and Cyrix from the future processor market, according to various analysts and computer executives, because Intel has not licensed the necessary rights for Slot 1-type processors.

As the Pentium II began to gain acceptance in the marketplace, National made a bid to buy Cyrix this past July, giving National a foothold in the X86 market and Cyrix access to an ancient and apparently broad cross-license. The deal will close in November.

To complicate matters, Cyrix filed a patent suit against Intel on May 13. Belgard, among others, postulated that the suit is partially an attempt to bring Intel to the table on licensing negotiations. The Federal Trade Commission is also currently investigating Intel for anti-competitive practices.

The question now is whether the National agreement applies to the Slot 1 designs. On its face, there is a good chance that it could, said observers.

"Typically, these cross-licensing agreements are fairly broad," said C.B. Lee, semiconductor analyst with Sutro & Co. "Assuming how the contract is written, it may include development on future products or derivative technology from future products." If the rights exist, Lee said the agreement could definitely help Cyrix in the marketplace.

Another question mark lay in the structure of the Cyrix acquisition. It is currently uncertain whether National has the right to assign the licensing agreement to another party. If Cyrix stays as an independent entity, Intel has a stronger argument. If Cyrix is absorbed wholly, the argument loses much of its gravity.

Belgard theorized that Intel may try to work something out with Cyrix prior to the conclusion of the acquisition in November.

Intel specifically excluded rights to the P6 bus in its broad cross-license with AMD, Mulloy told CNET in August. AMD yesterday said it would adopt the mechanical design of Slot 1, but develop different connector technology.

Intel is an investor in CNET: The Computer Network.