IBM vs Intel and SOI

[MacRumors]

MacBidouille claims (http://www.hardmac.com/niouzcontenu.php?date=2004-01-28#1481) that IBM is charging Intel more for SOI (Silicon on Insulator) technology licensing then other companies

Intel, just as AMD and Nvidia did, would have asked for an SOI license. Whereas the two others pay close to nothing, IBM would have asked Intel to pay US$ 500 Millions plus US$ 45 per manufactured processor.

[phranque27]

isn't is Silicon on <i>Insulator</i>? Or is this a new chip for diabetics? :)

[ebow]

I just hope that IBM gets a head start on Silicon-On-Penicillin for the G6. Man will that chip cure what ails ya! :D

[Tiauguinho]

That is the typo of the day! :D heheheheh

[isus]

i guess intel has a choice to make.

either way, they are behind amd and ibm by still not having a consumer 64-bit cpu.

[njfuzzy]

This isn't news. Of course Intel would pay more than AMD or nVidia... They sell a lot more units.

Even if the charge were more per unit, it isn't surprising. When you are number 2 or 3 in a market, you won't sell the number 1 guys your technology for as little as you would to other people.

[bubbagump]

Also, I believe AMD and Nvidia do a lot of manufacturing with IBM. Intel would probably never manufacture with IBM because they have considerable investments in their own plants. Therefore, IBM has a vested interest in increasing volume of these products and royalties propably remain scant in comparison to manufacturing earning.

Bubba

[Henriok]

$45 per chip seems a bit much. IBM would probably earn more per Intel-made chip than its own chips. Strange.

[ionas]

big blue is bag in biz, big time.

now lets hope someone will disturb ibm in other market segements, like notebooks and low and midrange servers...

we dont want ibm to be that monopoly it was back in days, right?

[crees!]

Originally posted by Henriok
$45 per chip seems a bit much. IBM would probably earn more per Intel-made chip than its own chips. Strange.

Just think. Intel isn't going to pay for that out of their own pockets... you could be certainly sure the processor pricetag will increase.

PS - Thanks for posting this Arn. I wanted to hear what everyone elses feedback on the subject.

[Rincewind42]

Originally posted by bubbagump
Also, I believe AMD and Nvidia do a lot of manufacturing with IBM. Intel would probably never manufacture with IBM because they have considerable investments in their own plants. Therefore, IBM has a vested interest in increasing volume of these products and royalties propably remain scant in comparison to manufacturing earning.

Your the first person who commented who I think gets it :) . The point of such an expensive agreement between IBM and Intel would be to secure IBM's rights to the technology. Right now for AMD & nVidia, IBM is providing their expertise and facilities to churn out chips, and for that I'm certain that IBM makes a healthy per-chip profit that is completely undisclosed. Intel however would want to not manufacture with IBM, but take the actual process home with them, and as such IBM has to protect it's investment in developing SOI.

It's like the difference between selling someone a fish, and selling them a fishing pole. Sell them the fish and they will come back tomorrow for another, but sell them the pole and you may never see them again. I can't see IBM as wanting to give away what amounts to their crown jewels without some major profit coming back to them.

[Phatpat]

I think this is an awesome move. It adds a lot more competition to an industry which Intel dominates in the consumer sector.

[dho]

I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?

[VIREBEL661]

Man, I think this is totally EXCELLENT! I mean, M$ is dumping intel for x2 (or whatever), and now intel has to pay IBM for their technological innovations? And what processors do Mac's run? Anyone?
All I remember is all this fud coming from intel 'Apple has made the wrong choice in processors all along - RISC is unamerican' (or whatever, I'm paraphrasing from memory, you get the idea)... More shades of gray, no? They teach in comp school about 'standardization'... Reality is, the more diverse a network or system setup is, the less it'll have trouble when these nasty infections pop up... Overall good news for Mac users, and more proof that we've chosen the right path all along.

[jimjiminyjim]

In the long run, this is good. Intel will be forced into a)funding IBM which supports apple or b)Innovating, and innovation breeds innovation - over the years.

[Dont Hurt Me]

Originally posted by Macrumors
MacBidouille claims (http://www.hardmac.com/niouzcontenu.php?date=2004-01-28#1481) that IBM is charging Intel more for SOI (Silicon on Insulator) technology licensing then other companies Shouldnt this title be reworded since it hasnt happened yet? It should say IBM will or may charge Intel if they decide to use this process shouldnt it?

[centauratlas]

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?

You are free to make life hard for a competitor. How about this for an analogy:

Apple would have had to license the Mac OS (or at least the GUI part) to Microsoft or Dell or ... from 1984 to 1995.

Look at it this way: they (Apple or IBM) made the product, they don't have to license it if they don't want, and if they decide to do so, they can under whatever terms they want since it is there discovery.

It would be like forcing Coke to license its formula to Pepsi (or the reverse if you prefer Pepsi).

It is there property and they can use it as they see fit.

[fatbarstard]

This looks rather interesting if it is all true... IBM - holder of the technoloyg looks like it is pricing the technology on the basis of ability to pay - which isn't a hell of a long way from ramsey pricing...

Its an economic theory of pricing, but if I says anymore I'll bores ya ta sleep!! ;)

Becuase Intel are the 64,000lb gorilla (not 64 bit chip gorilla) in the processor space they are going to have to pony up... probbaly to the point where they save $1 by not developing the technology (or something similar) themselves...

[ipiloot]

All those latest problems of Intel (lack of 64bit proc; lack of SOI) make me wonder where the hell do they spend all their R&D billions? AFAIK they spend more on chip R&D than IBM. By a far margin.

Maybe the old truth is working again - it requires one smartass with enough resources in your competitors company to ruin your business. And all your investment dollars mean nothing.

[stingerman]

Be careful you don't take those R&D numbers too literally. For example, Microsoft spends half their R&D budget on Stock grants, not actual R&D. So much is classified under R&D that strictly is not R&D.

Anyway, Intel is stuck in a vicious cycle of extending a legacy ISA. There attempts to break free from it, the iTanium 1&2, have failed miserably because of Intel's reliance on Windows and Microsoft. Microsoft is dead in the water and can't innovate, leaving Intel with no new software for their new Itanium architecture. So their screwed. In the meantime IBM catches up and now starts passing Intel, which finds itself a few years and Watts behind.

[Snowy_River]

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?

Nope. Even if IBM was in a monopoly position, it wouldn't be an anti-trust violation for them to refuse to license patented technology to a competitor.

[Snowy_River]

Strictly speaking, Intel cannot "develop" the same technology, as it is patented by IBM. Even if they were to develop SSOI, if the SOI component fell under the claims of IBMs SOI patent, then they could not produce chips using that technology without licensing SOI technology from IBM.

[wrldwzrd89]

Originally posted by Snowy_River
Strictly speaking, Intel cannot "develop" the same technology, as it is patented by IBM. Even if they were to develop SSOI, if the SOI component fell under the claims of IBMs SOI patent, then they could not produce chips using that technology without licensing SOI technology from IBM.

The article was good news for IBM, but with this being the case, IBM is even better off. I'm sure IBM will start to open up a lead over Intel since Intel is close to being stalled development-wise. Surely the SOI technology and subsequent SSOI technology will help IBM deliver better POWER and PowerPC chips than Intel's Pentium and Itanium chips.

[DGFan]

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?

It would only be illegal if you were a monopoly trying to protect your monopoly position.

There is nothing wrong with offering a sweet deal to a minor player in the market at the same time you stick it to the kingpin.

[DGFan]

Originally posted by Snowy_River
Nope. Even if IBM was in a monopoly position, it wouldn't be an anti-trust violation for them to refuse to license patented technology to a competitor.

Possibly. But in the rarified air of anti-trust law what's "illegal" and what's "legal" is generally determined by who can bring a winning lawsuit.

Monopolies that are competing unfairly can be forced to license technology. Look at what happened to Microsoft. They are being forced to license their IP because they unfair acted to maintain their monopoly.

[macshark]

Originally posted by DGFan
It would only be illegal if you were a monopoly trying to protect your monopoly position.

There is nothing wrong with offering a sweet deal to a minor player in the market at the same time you stick it to the kingpin.

Well said...

This will be very interesting. For the last 3-4 years, Intel had the edge in terms of semiconductor manufacturing technology, in terms of both yield and performance. Looks like now Intel is falling behind because they missed the leap to the SOI technology. And IBM will not only use this technology to gain a performance edge for their products, but also make it readily available to Intel competitors like AMD and NVidia - potentially even others. Power consumption is becoming as big a deal for graphics processors as main CPUs.

If Intel cannot exceed 3.6GHz this year in environments that require careful thermal management, AMD may win all the small factor PC designs that require less than 50W power consumption. Small form factor PCs and 1U servers seem to be the biggest growth areas currently. Apple may win big in the stackable server market - 2 90nm G5s appear to generate less heat than a single 3.X GHz Prescott.

[Snowy_River]

Originally posted by DGFan
Possibly. But in the rarified air of anti-trust law what's "illegal" and what's "legal" is generally determined by who can bring a winning lawsuit.

Monopolies that are competing unfairly can be forced to license technology. Look at what happened to Microsoft. They are being forced to license their IP because they unfair acted to maintain their monopoly.

Yes, but their initial refusal to license their technology was not their anti-trust violation. Forcing them to license their technology was a punishment for other anti-trust violation behavior.

[shamino]

Originally posted by Henriok
$45 per chip seems a bit much. IBM would probably earn more per Intel-made chip than its own chips. Strange. Not necessarily. Intel's high-end chips are very expensive.

According to PriceWatch (http://www.pricewatch.com), a 3.2GHz Pentium-4 Extreme Edition CPU sells for between $913 and $975. $45 is about 4.6-5% of this.

An Itanium-2 (Intel's 64-bit CPU) at 1.4GHz sells for between $1400 and $1500. $45 is about 3-3.2% of this.

We can probably expect that a future top-end chip (where SOI would be introduced) would be priced similarly.

I don't think a 3-5% royalty is an unreasonable license for a patented technology. Especially when that technology is likely to revolutionize the entire chip-making industry.

[Mr Maui]

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?


No ... it is not illegal.

If IBM came up with the process and owns the patent on it, then they have a right to decide who uses it, and how much of a royalty each user should pay. If the user doesn't want to agree to the fee, then the user can either use another technology, or create their own and patent it.

[DGFan]

Originally posted by Snowy_River
Yes, but their initial refusal to license their technology was not their anti-trust violation. Forcing them to license their technology was a punishment for other anti-trust violation behavior.

True to an extent (it was brought up in the US case but it wasn't central to it). However, refusal open up their OS is exactly what is getting MS in trouble in Europe. Regardless, while it is not as clear cut as I made it in my first note it certainly can be an anti-trust issue. But of course that makes no difference here since Intel is the king right now....

[Telomar]

Originally posted by shamino
I don't think a 3-5% royalty is an unreasonable license for a patented technology. Especially when that technology is likely to revolutionize the entire chip-making industry. You might want to try looking at Intel's low end products where it would be 25% or more. $45 a processor is wrong. It might be $45 million per processor family but it isn't going to be $45 for each.

As for SoI revolutionising the industry it really hasn't and there are other exciting things coming down the line.

Realistically with Intel IBM is probably just going to trade patents or some other license.

[Nermal]

Originally posted by phranque27
isn't is Silicon on <i>Insulator</i>? Or is this a new chip for diabetics? :)

For those of us who didn't see it quick enough, what did it say?

[altaic]

I didn't see it, but I assume it was Silicon on Insulin.

[Billicus]

This is great news for Big Blue. However, isn't it more than a bit ironic that we are now cheering for Big Blue, when twenty years ago the 1984 commercial was aimed at them? :rolleyes:

[lind0834]

Stick It to the Man. :)

[SallyWattle]

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor?


Lets sue them!! :mad:

Class Action - I can smell the money!! :D

Hey, lawyers can make a case out of anything. ;)

[The Shadow]

I just want to be the devil's advocate and put an opposing point of view...

...that IBM can choose NOT to license it's technology to Intel. Now wouldn't that be cool?!

I just remember back to when IBM first officially announced the G5 project, and I remember reading an official (ish) statement that one of their long term goals was to "put Intel out of business".

[Sabenth]

they charge intel intel chagres us everyones happy :)


but yea seems a bit weird to me maybe i dont get it thats all

[Scottgfx]

I was curious as to who makes ATI's chips? Being that nVidia has been a bit behind ATI lately, I was wondering if SOI would give them a "leg-up"? Or has it already? I'm still fairly happy with my Radeon 9800. :)

[shamino]

Originally posted by Telomar
You might want to try looking at Intel's low end products where it would be 25% or more. $45 a processor is wrong. It might be $45 million per processor family but it isn't going to be $45 for each.
What makes you think Intel would retrofit this new process onto their older, less expensive chips? Low-end stuff usually sells at a low margin. They only remain profitable because all the non-recurring costs have already been recouped.

To retrofit a new cutting-edge technology onto old chips is just a dumb idea. You incur massive new non-recurring costs, and you can't raise the price to make it back.
As for SoI revolutionising the industry it really hasn't and there are other exciting things coming down the line.
Then what's the big deal? If it's no big deal, then Intel shouldn't care about patent royalties. They can ignore this idea and use one of their own.

But they already tried that, and they're hitting a brick wall. At least this is what the original article said.

[crenz]

Originally posted by shamino
An Itanium-2 (Intel's 64-bit CPU) at 1.4GHz sells for between $1400 and $1500.

Using "Itanium" and "sell" in the same sentence seems kind of weird -- considering that Intel is still giving away a lot of them to make people use the darn thing ;) .

The chip-making industry is going to develop in an interesting way for the next few years. I guess for CPUs, there's going to be a conglomerate of companies that work on chips together, rather than individual competitors. We are already seeing it with AMD and IBM, but they are probably going to collaborate much more. The chip-making industry is going to invest a record sum of $43 billion dollars (http://www.theregister.co.uk/content/3/35195.html) next year, and it's only going to get worse. No company will be able to produce CPUs on their own in a few years.

[shamino]

Originally posted by crenz
Using "Itanium" and "sell" in the same sentence seems kind of weird -- considering that Intel is still giving away a lot of them to make people use the darn thing ;) .
Perhaps, but the prices I cited are real. Presumably, somebody must be buying these things if stores are selling them at $1400-1500 each. Of course, there were only three vendors listed when I performed my search, so that's probably also indicative. :)
The chip-making industry is going to develop in an interesting way for the next few years. I guess for CPUs, there's going to be a conglomerate of companies that work on chips together, rather than individual competitors. We are already seeing it with AMD and IBM, but they are probably going to collaborate much more. The chip-making industry is going to invest a record sum of $43 billion dollars (http://www.theregister.co.uk/content/3/35195.html) next year, and it's only going to get worse. No company will be able to produce CPUs on their own in a few years.
We'll have to see about that, won't we? The only thing that seems likely about the future is that it will be weirder than anything we can think of right now.

[Telomar]

Originally posted by shamino
What makes you think Intel would retrofit this new process onto their older, less expensive chips? Low-end stuff usually sells at a low margin. They only remain profitable because all the non-recurring costs have already been recouped.

To retrofit a new cutting-edge technology onto old chips is just a dumb idea. You incur massive new non-recurring costs, and you can't raise the price to make it back.
Intel's lowest binned PIVs are still produced on the same process only they sell for around $180, if that and those are the chips that Intel sells a lot of. What you seem to fail to understand is even the processors like Celerons, which are at under $90 each, use the same process as their higher end cousins. It's cheaper to manufacture everything off the single process, especially when they're related to one another.

Originally posted by shamino
Then what's the big deal? If it's no big deal, then Intel shouldn't care about patent royalties. They can ignore this idea and use one of their own.

But they already tried that, and they're hitting a brick wall. At least this is what the original article said. They can ignore it but it poses a problem until the technologies that would be more beneficial are able to be used, many of which are 2 years away (ie. they'll come in with the 65 nm process). Changing transistor design and material type holds greater promise but that doesn't mean you don't work on other technologies. SoI has been a difficult and costly step for everybody involved with it. Only question for Intel is do they try to persevere until they can introduce something else or do they go for SoI. As it happens it's worth noting though that Intel uses a different process to the one IBM uses for SoI though.

[foniks2020]

All it will take is for Intel to develop something that IBM wants or to have on hand something IBM didn't know they wanted.... and all of this would go away. The tech industry uses IP as a negotiating point and they constantly swap IP with each other with various 'terms' of usage.

So in the end I suspect that IBM and Intel will work out a mutually agreeable arrangement. Possibly IBM asked too much or Intel offered too little and as a result IBM said, "well then here's the payment plan" cash is the lowest common denominator when negotiations break down.

[Snowy_River]

Originally posted by Telomar
...As it happens it's worth noting though that Intel uses a different process to the one IBM uses for SoI though.

Um... isn't the point of this thread the fact that Intel doesn't currently use SOI at all? Given that, how does your statement make sense?

Also, for what it's worth, if Intel were to come up with a completely different method of creating SOI, but the final result was chemically the same, it would still be (most likely - depending on how the claims are worded) covered by IBM's patent...

[Telomar]

Originally posted by Snowy_River
Um... isn't the point of this thread the fact that Intel doesn't currently use SOI at all? Given that, how does your statement make sense? Intel has been working on SoI for several years. They haven't only just started looking into this.

Originally posted by Snowy_River
Also, for what it's worth, if Intel were to come up with a completely different method of creating SOI, but the final result was chemically the same, it would still be (most likely - depending on how the claims are worded) covered by IBM's patent... That's debatable but as it happens the end result that they produce isn't chemically identical anyway.

[Trekkie]

Originally posted by njfuzzy
This isn't news. Of course Intel would pay more than AMD or nVidia... They sell a lot more units.

Even if the charge were more per unit, it isn't surprising. When you are number 2 or 3 in a market, you won't sell the number 1 guys your technology for as little as you would to other people.

Acutally, it'd be the other way around. Intel due to volume should have a better discount.

However for years they've poo-pooed SOI and claimed they could do better. IBM isn't above saying 'hey we offered it to you once, now you gotta pay for it because now we know you need it

[Trekkie]

Originally posted by foniks2020
All it will take is for Intel to develop something that IBM wants or to have on hand something IBM didn't know they wanted.... and all of this would go away. The tech industry uses IP as a negotiating point and they constantly swap IP with each other with various 'terms' of usage.

Actually, IBM and Intel have some type of agreement that says whatever Intel dreams up IBM gets royalty free from a tech perspective. Goes back to the IBM PC days when they helped this poor strugling company by picking the 8086 over Motorola if I remember my history right.

It doesn't reciprocate either.

[foniks2020]

Originally posted by Trekkie
Goes back to the IBM PC days when they helped this poor strugling company by picking the 8086 over Motorola if I remember my history right.

It doesn't reciprocate either.

Now that is very informative. Thanks for the info. Very interesting indeed.

[Azeron]

This is not a huge problem. Texas instruments came out with SoI first, so if push comes to shove Intel could license thier technology, or buy TI out. I wouldn't be surprised if there was some patent infringement on IBM's part. TI's patents were pretty borad last time I heard.

[iChan]

its called price discrimination and its perfectly legal

Originally posted by dho
I find this very interesting. Is there any posibilty of this being illegal? As in making life very hard for a competitor? I dont pretend to know much about the laws on this issue, anyone have any input?

[Code101]

It's funny how Intel is the first to do .09 on the Pentium4E! They are out and in x86 machines as we speek. Where is the .09 on the IBM chips? Intel always comes out with the technology first and then Apple/IBM comes out months later and says that they came out with it first.

SSOI belongs to Intel as it is! They are the ones that made this technology.

[crees!]

Originally posted by Code101
It's funny how Intel is the first to do .09 on the Pentium4E! They are out and in x86 machines as we speek. Where is the .09 on the IBM chips? Intel always comes out with the technology first and then Apple/IBM comes out months later and says that they came out with it first.

SSOI belongs to Intel as it is! They are the ones that made this technology.

newbie troll

[Steradian]

Originally posted by Code101
It's funny how Intel is the first to do .09 on the Pentium4E! They are out and in x86 machines as we speek. Where is the .09 on the IBM chips?

they are in the new Xserve G5's dude...they exist...and work...remember they were announced at MWSF? Here take a look at the news Here (http://maccentral.macworld.com/news/2004/01/27/virginia/index.php?redirect=1076154261000)

[Henriok]

Originally posted by Steradian
they are in the new Xserve G5's dude...they exist...and work...remember they were announced at MWSF? Here take a look at the news Here (http://maccentral.macworld.com/news/2004/01/27/virginia/index.php?redirect=1076154261000) In all fairness. There might be some who actually have gotten production examples of Prescott, but none have got any Xserve G5s just yet.

But.. a troll is a troll is a troll. I really see no reason to argue who's first in this business when it in this case just differ a couple of weaks. It's all marketing. If Apple/IBM was the least concerned about his, they could easily shipped some Xserves early just to shut the x86 trolls up. But why bother? It's pretty obviuos that Intel failed with Prescott so the competition, and even Intel itself take this evolutionairy step quite easily. It's just the fanboys that seem to celebrate its arrival.

Intel's 90 nm production was due last September originally, but it was at least 4 months late apparently. Prescott chips are 100 W monsters, doesn't bring any significant performace increase and cost more than its predecessor. Aaah, there's a success if I ever saw one!

And it still doesn't do 64 bit processing, I might add. Athlon/Opteron and G5 win that contest on walk over. Itanium doesn't qualify. Just one of those processors cost more than an entire Power Mac G5 system. An Pentium 4EE too almost.

In the meantime IBM is closing the MHz gap fast, and AMD is readying its 90 nm fab and with it they will pack a serious punch. Will Intel keep up? That's the question I've been asking myself lately.