Apple, Chip Firm Likely to Launch a Joint Venture

Apple Computer Inc. and chip-maker VLSI Technology will hold a joint press conference Tuesday at which they are expected to announce an agreement to work together in developing products that use a computer design philosophy known as reduced instruction set computing (RISC).

The agreement would be the clearest indication yet of how Apple plans to pursue RISC, which dramatically improves computer speed by cutting down the number of instructions that a processor, or computer-on-a-chip, has to perform to execute certain functions.

RISC technology is now widely used in computer workstations, and Apple might eventually use the technology to enhance the graphics capabilities of its Macintosh computers, add new “multimedia” functions such as full-motion video processing, or speed up its laser printer. Eventually, a RISC processor could be used as the brain inside a new generation of Apple computers.

VLSI Technology already makes many of the specialized chips that are used in Apple products, but the company has been struggling lately in a soft but highly competitive chip market. A deal with Apple would be a major boost for the firm, and the company’s stock rose 20% on Wednesday as word of the deal spread.

Both Apple and VLSI have declined to comment on what they plan to announce Tuesday. William Tai, an analyst with Alex. Brown & Sons, told Dow Jones that Apple would not take an equity stake in VLSI, as some had speculated, but rather that the two firms would enter into a long-term technology development venture that could include other partners.

He said Apple would contribute employees and a “substantial” amount of capital to the venture, and that the first products could emerge as soon as six months from now.

The San Francisco Chronicle reported Thursday that the deal would include the British computer and chip concern Acorn Computers, which has successfully developed and marketed RISC products that are used as graphics processors and to control laser printers and other devices. The report could not be independently confirmed.

The VLSI-Apple venture could represent a threat to Motorola, which supplies the microprocessor that forms the brain inside the Macintosh. Motorola has been pushing its own RISC technology, and Apple was a major potential customer for those chips. But Apple might eventually end up using RISC products from both VLSI and Motorola.