IBM vs Intel and SOI

[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]

Royalties

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, 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]

Re: Royalties

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?

 

[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!!

Class Action - I can smell the money!!

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]

Who makes ATI's chips?

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]

Re: Royalties

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]

Re: Royalties

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 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]

Re: Royalties

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 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]

Re: Re: Royalties

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]

Regardless this is how IP works for industry

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]

Re: Re: Re: Royalties

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]

Re: Re: Re: Re: Royalties

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]

Re: Regardless this is how IP works for industry

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]

Re: Re: Regardless this is how IP works for industry

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.