AMD Loses Right to Use Key Intel Code : Technology: The verdict is a major blow to its effort to market a 486 chip ‘clone.’
Advanced Micro Devices on Wednesday suffered a major setback in its convoluted legal battle with rival Intel Corp. when a federal court jury ruled that AMD did not have the right to use special chip software developed by Intel.
The decision could seriously delay AMD’s plans to market a “clone” of Intel’s 486 computer-on-a-chip, a crucial product that AMD is hoping will produce hundreds of millions of dollars in revenue. The AMD chip is also expected to have a major impact on the personal computer business by introducing competition in a key product category.
Intel sued AMD for copyright infringement in 1990, accusing it of illegally using Intel microcode, a set of instructions embedded in a computer chip that controls the chip’s basic functions. AMD didn’t deny using the microcode, but maintained it had the right to do so under a 1976 licensing agreement.
But the jury upheld Intel’s contention that the licensing agreement only allowed AMD to use the microcode for internal development, not for commercial products.
AMD Chairman Jerry Sanders said in a statement that “the decision will probably result in a delay in the introduction of the AM486,” but said the company was “fully confident” that it could produce a 486 clone by developing its own microcode. AMD also said it would appeal the verdict.
The lawsuit involved only a relatively minor AMD product known as the 287, and AMD could be required to pay millions of dollars in damages relating to that product. More importantly, however, AMD uses the same microcode in its 386 chip, and had expected to use it in its forthcoming 486 as well.
The 386 is widely used in personal computers, and AMD has garnered an estimated 40% of the $2-billion market for 386 chips since it introduced its product last year. In response, Intel has cut its prices and urged PC vendors to shift to the more powerful 486, where it still holds a monopoly.
In principle, Wednesday’s decision could have devastating implications for AMD’s 386. But earlier this year, an arbitrator ruled in a separate but related dispute between the companies that AMD had unconditional rights to any Intel technology that it was using in its 386 chips. Experts say that should provide AMD with an adequate defense in a pending lawsuit over the 386 microcode.
But the 486, which AMD was expected to begin shipping this summer with a commercial roll-out in the fall, is a different matter. AMD will now have to use its own microcode in the chip, which is likely to delay the product and could raise questions as to whether it’s fully compatible with the Intel 486.
“It’s going to be a technical challenge to maintain some sort of schedule for the 486 . . . they could take a six-month hit,” said Ken Lowe, an analyst at Dataquest. He added that AMD would also have to “re-establish momentum” by persuading PC manufacturers that 486s with AMD microcode were truly compatible and would not create software glitches.
But Dean McCarron, an analyst at In-Stat in Phoenix, expects only minor delays on the 486.
AMD’s success with the 386, and the subsequent entry of Texas Instruments, Cyrix, and Chips & Technologies into the 386 market (with their own microcodes) has dramatically reduced prices and expanded the selection on both 386 chips and 386-based PCs. The AMD 486 is expected to have a similar impact.
