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News > Technology
Nat'l Semi, IBM end pact
September 25, 1998: 10:40 a.m. ET

Big Blue to stop selling Cyrix-designed chips by the end of the year
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NEW YORK (CNNfn) - National Semiconductor Corp. said Friday that it has ended its chip-manufacturing pact with IBM Corp.
     Under the agreement, IBM will stop selling chips designed by National Semiconductor's Cyrix subsidiary by the end of the year. Cyrix chips are used in PCs priced less than $1,000.
     Cyrix will also be relieved of its obligation to purchase semiconductor wafers from IBM, and Cyrix will transfer certain assets to the computer maker. National Semiconductor said it expects to take a charge of $50 million to $55 million in its fiscal second quarter, which ends Nov. 29.
     One analyst said the deal will probably help the struggling National Semiconductor recoup some of its losses. The company has blamed a soft worldwide chip market for its recent poor earnings performances.
     Since last October, National Semiconductor's stock has plummeted from a 52-week high of 42-7/8 to less than $10 a share.
    
(Click here to see National Semiconductor's stock activity)

     Mona Eraiba, an analyst at Gruntal & Co., said the termination of the agreement will result in some cost savings for National Semiconductor.
     "National has been bitterly complaining about this relationship because it's been costing them a lot of money," she said. "It was a good relationship for Cyrix before National bought them (in November 1997.) But it didn't make sense for National, with its own wafer-manufacturing facilities, to rely on IBM."
     National Semiconductor (NSM) shares fell 1/2 to 9-7/16 in early trading. IBM (IBM) shares slipped 1/16 to 130-1/2. Back to top

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