Texas Instruments to Sell Its Own 486 Chip

Texas Instruments is expected to announce today that it will begin selling a version of the computer-on-a-chip that is used in most personal computers, thus becoming the latest challenger in a market once monopolized by Intel Corp.

Industry sources said Texas Instruments will sell a chip designed by Cyrix Corp., a small Texas company. Cyrix recently began marketing a chip that it calls a 486--indicating compatibility with Intel’s most advanced microprocessors--although most industry observers said its performance is closer to that of the less-powerful 386 chip.

Separately, Intel on Wednesday dropped the price on a low-end version of the 486 to $119 from $282. The dramatic price drop means the 486SX chip now will be inexpensive enough for lower-cost personal computers.

Responding to intense competition in the 386 market from Advanced Micro Devices--and the prospect of additional competition from Chips & Technologies, Cyrix, and now Texas Instruments--Intel has been pushing PC manufacturers to adopt the 486 as their mainstream chip. Intel still enjoys a monopoly on the 486, although AMD is expected to enter that market in the fall.

Intel has also sought to defend its dominant market position in the courts. The last of a number of legal actions involving AMD is now being heard in U.S. District Court in San Jose. Intel has also sued Cyrix and Chips & Technologies.

Cyrix and Chips and Technologies contract out manufacturing of their chips to other companies, including Texas Instruments.

TI, in turn, has a patent cross-licensing agreement with Intel that covers the period during which the 386 was developed. Cyrix and Chips and Technologies claim that agreement protects them from patent-infringement claims by Intel.

The cross-licensing agreement should also help TI avoid patent infringement claims from Intel. Combined with its considerable production capabilities and marketing muscle, that could help TI become a major challenger to Intel.

TI declined to comment on the announcement scheduled for Thursday. Industry sources said they expect TI to announce that it will sell the Cyrix-designed chip under the TI name and pay a royalty to Cyrix.