FTC clears Intel's acquisition of Digital's chip assets

The US Federal Trade Commission has approved Intel's plan to acquire Digital's semiconductor business, with the condition that Digital license its Alpha technology to certain chip makers approved by the FTC, officials said. 'We'll move as quickly as possible to close this transaction,' said said Intel spokesman Chuck Mulloy immediately after the decision was announced. The proposed deal is part of a settlement of a long-standing patent dispute between Intel and Digital.

The US Federal Trade Commission has approved Intel's plan to acquire Digital's semiconductor business, with the condition that Digital license its Alpha technology to certain chip makers approved by the FTC, officials said. "We'll move as quickly as possible to close this transaction," said said Intel spokesman Chuck Mulloy immediately after the decision was announced

The proposed deal is part of a settlement of a long-standing patent dispute between Intel and Digital. Under terms of the deal, Intel would acquire Digital's state-of-the-art chip manufacturing facility in Hudson, New York, where it would reserve space to make Digital's high-speed, 64-bit Alpha processors. Digital, under the proposed deal, would retain ownership of the Alpha technology.

Intel next year plans to release its own 64-bit processor, code-named Merced, and Alpha is expected to provide competition for the Intel chip in certain server and workstation markets. The conditions imposed today by the FTC are designed to ensure the continued development of Alpha, and hence to ensure competition in the semiconductor business, the FTC said.

"The Commission's order is designed to ensure that Alpha remains a viable competitive alternative to Intel's chips -- by sending a strong message to the market that other major chip makers are now committed to Alpha's future," FTC Chairman Robert Pitofsky said in a statement.

The FTC said Digital must license its Alpha technology to Advanced Micro Devices Corp. and Samsung Electronics Ltd. Digital must also begin the process of certifying IBM, or another Commission-approved company, as an alternative production source for Alpha chips, the FTC said in its statement.

Besides the Hudson facility, Intel gains from the deal Digital's license and customer base for the StrongARM processor, a low-power chip used in a range of portable and embedded devices.

Digital, meanwhile, escapes from the semiconductor manufacturing business. At the time the deal was proposed, Digital said its chip manufacturing operations were not proving profitable.

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