Defense Dept. to Intel: stay

Electronic News, Feb 3, 1997 by Sarah Cohen

New York--While Intel wants to convert its current mil-qualified microprocessor customers over to its commercial high-reliability products (EN, Dec. 23, 1996), the Pentagon and some Intel competitors may have other ideas. Electronic News has learned that representatives of Intel and the Defense Supply Center (DSCC) in Columbus, Ohio (formerly known as DESC) last week met to discuss the future of Intel's soon-to-be-abandoned Qualified Manufacturers List (QML) product line.

The Department of Defense had tried unsuccessfully to convince Intel not to leave the QML market, due to the critical nature of Intel's parts, Intel's dominant position in the market, and other concerns. DSCC is now reportedly coaxing Intel to agree to sell wafers to continuing QML suppliers, or find other sources that would keep on producing the Intel mil-qualified parts. At last week's meeting, Intel reportedly agreed to keep its options open, but expressed to Electronic News its reluctance over handing over its intellectual property to outside sources. Intel also said the DSCC is suggesting changes to Intel's strategy "at the eleventh hour."

Meanwhile, although military IC suppliers such as Motorola, Advanced Micro Devices and, most recently, Intel and Philips, have decided to drop their military-certified product lines--and observers have noted a consolidation trend of mergers and buyouts, leaving fewer and fewer chip and system suppliers in the military market--an unusually high number of semiconductor niche players are seeking QML certification to meet military specifications this year.

Xilinx Certified

Xilinx said last week it has received QML status. Others recently certified include Signal Processing Technology and Actel. At the same time, a dogfight may reportedly soon shape up for Intel's QML MPU business, especially if Intel decides not to comply with the DSCC's suggestions.

A DoD document notes that if Intel does not agree to an alternate manufacturing source for its products, problems may develop because of "the criticality of their product line, their dominance in the marketplace for these product lines and the complexity of their products which makes testing at the application level very cost prohibitive." So far, other leading military IC vendors have refrained from mounting costly full-scale QML offensives targeting Intel's MPU line, but some reportedly are considering such initiatives. Intel will take orders through December, 1997, on its mil-spec products being discontinued, which include microcontrollers and memory, and will ship orders for 12 months after that.

The four IC suppliers reported to be the largest in the military semiconductor market--Texas Instruments, National Semiconductor, Harris Semiconductor and Analog Devices--have no intentions of abandoning the overall military-qualified business that Intel deems less fruitful than commercial semiconductor products. They are all in the process of expanding their military offerings, and all hope to gain by Intel's QML departure.

Intel would prefer to hold onto most of its military presence and has tried to reassure the DSCC that its commercial off-the-shelf (COTS) products are almost as stringently tested as its QML lines. Barbara LaFara, marketing manager of Intel's military group, stated, "Intel maintains rigorous quality standards regardless of QML certification. We were the first company to be granted QML certification because our own standards are quite in line with QML standards."

Commercial Grade Won't Do

Darrell Hill, chief of the Sourcing and Qualification Division of DSCC, said simply that a COTS product from Intel will not have the temperature range to meet all of the military's requirements. He also pointed out that the DSCC is concerned because Intel will no longer offer back-end testing.

In the document from the DSCC written prior to Intel's final decision to drop its QML line, the agency also writes, "DSCC has submitted a letter to Intel suggesting alternatives to exiting the military and special environment products market.

"If Intel does exit this market sector, it should be noted that this problem will impact commercial, industrial, automotive, aerospace and military communities." The DSCC would prefer that Intel agree to sell wafers to continuing QML suppliers, or to find other sources that would keep on producing the Intel mil-qualified parts.

Ms. LaFara contends that Intel does not have a policy of supplying wafers to outside sources, and although the company has licensing agreements, "The company highly protects its intellectual property." She said that Intel is open to proposals of after-market distribution sources. "But it's at the eleventh hour at this point, and it would be difficult to manage the transference of engineering resources that have already been redeployed to other divisions."

Meanwhile, new opportunities may be at hand for many of the parts vendors which have stuck it out in the military sector. As military outlays have declined in recent years, numerous active and passive component makers (most recently AMP in connectors) have eliminated or scaled back military efforts, or tried to switch customers over to high reliability commercial offerings. But firms continuing to offer qualified mil parts may be in line to gain extra sales.