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Intel, Via bury most of hatchet in chipset lawsuit

The companies have settled the bulk of their wide-ranging lawsuit in a way that will allow Via to sell Pentium III-compatible chipsets.

Intel and Via Technologies have settled the bulk of their wide-ranging lawsuit in a way that will allow Via to sell Pentium III-compatible chipsets.

Under the settlement, announced today, Taiwan-based Via will pay Intel an undisclosed lump sum and provide the chip giant with ongoing royalty payments. In return, Via will have a license to manufacture chipsets for computers containing Pentium III, Celeron and earlier Intel processors.

The settlement will lead to the dismissal of claims in lawsuits filed in England, the United States and Singapore, as well as a claim filed by Intel with the U.S. International Trade Commission to bar the importation of Via's products into the United States, said Chuck Mulloy, an Intel spokesman.

Although the settlement ends most of the issues in the case, the lawsuit will continue. Intel has modified the scope of the lawsuit and has alleged that Via's chipsets supporting "non-Intel processors," such as its AMD-compatible chipsets, violate Intel's intellectual property, Mulloy said.

If the court agrees with Intel's claims, this could mean that Intel would be due royalties for chipsets inside computers powered by processors from rival AMD. The settlement does not cover these claims.

The settlement also does not apply to Via's processor line. Intel states that Via does not have a license to manufacture its Cyrix-brand processors, but no lawsuit is pending.

"What we've been working on for a while is just getting all the issues resolved and getting on with what we've been doing," said Dean Hays, director of marketing for Via. "We haven't felt like we've done anything wrong. Intel has probably had a different opinion."

Intel and Via are bitter competitors in the market for PC chipsets, an internal component that allows the processor to communicate with the rest of the computer. Via became the first company to be granted a license to make chipsets for Pentium II, Celeron and Pentium III processors in late 1998.

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Chip competition
The deal soon broke down, however. In the spring of 1999, Via released a chipset with a 133-MHz system bus, a performance-enhancing feature that bested Intel's 100-MHz bus.

Intel sued Via in the United States, England and Singapore, also naming First International Computer and Everex, two companies owned by the same conglomerate, alleging that Via had violated its intellectual property. Intel even sought to have Via's products banned in the United States.

Via, meanwhile, continued to gain market share. The company also took potshots at its larger competitor.

"Intel sued Cyrix five times, and they never won," Wen Chi Chen, Via's CEO and a former Intel executive, said last November. "Intel--they just love lawsuits."

Although Intel continues to have a larger market share, Via has been catching up rapidly and could overtake Intel by the end of the year, Chen said last month.

"There is a pretty good opportunity that we will be No. 1 in the chipset business" by the end of the year, he said in an interview with CNET "People realize that Via has better performance and cost structure."

The settlement comes weeks after Intel released its 815 chipset, a Pentium III chipset that contains a 133-MHz system bus and hooks up to ordinary memory. These two functions effectively pit the 815 against Via's main Intel-compatible chipsets. Until the 815, Intel's chipsets containing the 133-MHz system bus worked only with more expensive Rambus memory.

Intel would not comment on whether it is discussing with Via a license for Via to manufacture a chipset compatible with the upcoming Pentium 4.

"I think it's a positive for the industry that these issues are now no longer going to be fought in a courtroom," said Nathan Brookwood of consulting group Insight 64, adding that the release of the 815 chipset attenuated any competitive motives behind the lawsuit. "These issues became moot with the 815."

While the settlement will clear up some of the static in the chipset market, disputes between the two companies could flare up again. Via is working on supporting a chipset that would be compatible with Double Data Rate (DDR) memory. Intel supports another technology, so-called Rambus-based memory for desktop PCs.

"We'll see if that promotes another conflagration," Brookwood said.