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In the electronics industry, a second source is a company that is licensed to manufacture and sell components originally designed by another company (the first source).
It is common for engineers and purchasers to avoid components that are only available from a single source, to avoid the risk that a problem with the supplier would prevent a popular and profitable product from being manufactured. For simple components such as resistors and transistors, this is not usually an issue, but for complex integrated circuits, vendors often react by licensing one or more other companies to manufacture and sell the same parts as second sources. While the details of such licenses are usually confidential, they often involve
cross-licensing A cross-licensing agreement is a contract between two or more parties where each party grants rights to their intellectual property to the other parties.
Patent law
In patent law, a cross-licensing agreement is an agreement according to which two ...
, so that each company also obtains the right to manufacture and sell parts designed by the other.
Examples
MOS Technology
MOS Technology, Inc. ("MOS" being short for Metal Oxide Semiconductor), later known as CSG (Commodore Semiconductor Group) and GMT Microelectronics, was a semiconductor design and fabrication company based in Audubon, Pennsylvania. It is mos ...
licensed Rockwell and Synertek to second-source the 6502
The MOS Technology 6502 (typically pronounced "sixty-five-oh-two" or "six-five-oh-two") William Mensch and the moderator both pronounce the 6502 microprocessor as ''"sixty-five-oh-two"''. is an 8-bit microprocessor that was designed by a small te ...
microprocessor and its support components.
Intel
Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chip manufacturer by revenue, and is one of the developers of the x86 seri ...
licensed AMD
Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California, that develops computer processors and related technologies for business and consumer markets. While it initially manufactur ...
to second-source Intel microprocessors such as the 8086 and its related support components. This second-source agreement is particularly famous for leading to much litigation between the two parties. The agreement gave AMD the rights to second-source later Intel parts, but Intel refused to provide the mask
A mask is an object normally worn on the face, typically for protection, disguise, performance, or entertainment and often they have been employed for rituals and rights. Masks have been used since antiquity for both ceremonial and pra ...
s for the 386 to AMD. AMD reverse-engineered
Reverse engineering (also known as backwards engineering or back engineering) is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accompli ...
the 386, and Intel then claimed that AMD's license to the 386 microcode only allowed AMD to "use" the microcode but not to sell products incorporating it. The courts eventually decided in favor of AMD.Michael J. Lennon, ''Drafting technology patent license agreements'', Aspen Publishers Online, 1999 , Appendix 4C ''The AMD-Intel, AMD-Fujitsu Cross-License and Joint Venture Agreement''
References