ARM-Digital relationship in question after Intel buyout

Now that Intel plans to acquire Digital's semiconductor business, what becomes of the StrongARM processor, which Digital has manufactured under license from Advanced Risc Machines since 1995? It seems nobody is quite sure. ARM, whose two major shareholders are Acorn Computer and Apple Computer, both of which own 43%, was not consulted over the agreement. An Acorn official admits to being 'slightly nervous' about the deal, but believes that Intel will continue to manufacture StrongARM chips in order to fill a major hole in its strategy - mainly a lack of inexpensive chips for small information devices, including those which run Microsoft's Windows CE.

Advanced RISC Machines (ARM) is unsure what will become of its licensing agreement with Digital, now that Intel plans to acquire Digital's semiconductor business, according to an Acorn Computer Group PLC official.

Digital licensed the ARM 32-bit RISC processor core in 1995 and has since built and marketed a range of StrongARM processors based on the technology. On Monday, Intel said it would acquire Digital's semiconductor business for US$700 million. One of the stipulations of the contract allows Intel to obtain rights to manufacture and sell non-Alpha Digital semiconductor products, which includes the StrongARM line of semiconductors.

"Implicated parties were not consulted in the Intel-Digital agreement," said Peter Bondar, director of engineering and technology at Acorn, a parent company that owns 43% of ARM and uses ARM chips in most of its products. (The other major shareholder is Apple Computer, which also owns 43% of the company and uses the chips in its Newton line.) ARM is not sure whether Intel, which it considers a major competitor, will continue building chips based on the ARM technology, Bondar said.

StrongARM chips now in the works at Digital will be "delivered and concluded," but ARM is not sure what will happen after that, he said. Exactly how the licensing agreement between ARM and Digital will play itself out once Intel acquires the StrongARM technology is unclear.

Acorn has based the reference design for its coNCord network computer on the Digital SA110 StrongARM processor.

However, ARM believes that Intel will continue to manufacture StrongARM chips in order to fill a hole in its strategy - mainly a lack of inexpensive chips for small information devices, Bondar said.

"Intel is completely dominant in the desktop market," Bondar said, but is "badly represented" in the small device arena, 80% of which is supplied by ARM, MIPS and Hitachi processors. "Somebody was very clever at Intel" in terms of acquiring the StrongARM technology from Digital, Bondar said. Intel will realise how powerful the StrongARM architecture is and will exploit it, he said.

At least one analyst agreed with this assessment, citing StrongARM as one of the most important aspects of Intel's interest in Digital's semiconductor business. Intel will be able to use the chip to get into the market for pagers, game consoles and handheld devices, said Jim Garden, director of technical services at Technology Business Research earlier this week.

While ARM is "slightly nervous" about the outcome of the Intel-Digital linkup, the company is confident that it will mean continued production of the StrongARM chip, which in turn will boost the profiles of both ARM and Acorn in the market, Bondar said.

ARM can be contacted at http://www.arm.com/.

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