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The FTC approved a patent settlement between Intel and DEC but required DEC to find other partners to manufacture its Alpha microprocessor chip. Terms of the unusual deal call for DEC to complete an Alpha licensing deal with Intel rival AMD and reach an agreement with IBM or another FTC-approved company on chip production. The FTC, expressing concerns over Intel's domination of the microprocessor market, said it could withdraw its support as early as Jun 1998 if DEC fails to meet its responsibilities. Intel holds a 90% share of the processor market, but the FTC wants to keep Alpha viable despite its 1% market share. The speedy Alpha chips power some of the most powerful computers, and Intel wants to enter this lucrative market. DEC and Intel reached a proposed settlement of a 1997 DEC lawsuit that charged Intel with stealing Alpha patents and using them in its Pentium microprocessors. In the settlement Intel agreed to buy DEC's alpha chip plant for $700 million and in return grant the company discounts and other favors.

Taiwan is beginning a new policy on business with China and will allow semiconductor makers to move used equipment to Chinese manufacturing facilities. Some believe that increased investment in China will hurt Taiwan's economy, but the chip makers are pleased to be going forward with their already planned projects.

The US Department of Defense has issued a 'stop shipment' order covering shipments of semiconductors from Unitrode Corp, due to quality-control concerns. Earlier in Dec 1989, Unitrode had imposed a halt in their own shipments, and will continue to do so until the company and the government have completed an investigation into the matter. The semiconductors that were banned are used in military products, accounting for 25 percent of Unitrode's $163.3 million in 1988 sales. On the New York Stock Exchange, Unitrode shares closed at $5.875, down 25 cents per share. The company does not know how long the investigation will take.

Bush's administration reports that the government is not planning to cut funding for the semiconductor manufacturing consortium called Sematech, which is is the Pentagon's project in industry-government cooperation. The administration's top science official, D. Allan Bromley, says that Sematech is involved in 'enabling technologies' and should qualify for government investment. A government-appointed panel will recommend giving Sematech more funding and creating a multibillion-dollar venture-capital fund to provide low-cost financing to US consumer-electronics companies. Sematech funding was in doubt when government funding for high-definition television technology was recommended to be dropped in Nov '89.