Originally created 01/20/99

Intel will build chips with security capabilities

SAN JOSE, Calif. -- Intel Corp. is teaming up with a computer security company to make processors designed to keep hackers away from credit card numbers and digital signatures.

Intel Corp., the world's largest computer chip maker, and RSA Data Security, Inc., a leading encryption company, announced Monday that their joint effort will support e-commerce growth worldwide.

However, Intel's innovation could also conflict with restrictions on the export of data scrambling technology, imposed by the government to protect the nation from criminals and terrorists.

"We're entering an age where e-commerce transactions will be conducted on a global network consisting of a billion connected personal computers," said Michael Glance, general manager of Intel's platform security division.

David Wu, an analyst with the bank ABN Amro Inc., in San Francisco, said Intel may face obstacles to selling the technology overseas.

"These high performance chips are going to get Internet commerce more safe," he said. "It helps the overall computer industry, but Intel may have to use good, persuasive lobbyists and lawyers in Washington to get them accepted."

Data scrambling technology, known as encryption, has mostly been the product of software companies, who add it to programs used to surf the Internet such as browsers.

The U.S. Department of Commerce has imposed limits on export of the most powerful encryption technology, fearing it could fall into the hands of criminals and terrorists, who would be able to send messages to each other that law enforcement authorities won't be able to read.

The high-tech industry has long protested the restrictions, saying they were hurting business and accomplished little because foreign competitors were also selling the technology

On Monday Intel -- which has about 85 percent of the computer chip market -- stepped into the field. It plans to develop computer chips that incorporate Intel hardware and leading software security tools by RSA Data Security Inc., of San Mateo, Calif.

Intel discussed the plans Monday at a security conference in San Jose sponsored by RSA.

Glance, the Intel manager, wouldn't comment on how the company plans to get around the export restrictions.

Officials of the U.S. Department of Commerce, which imposes the encryption regulations, were unavailable for comment Monday because of the federal Martin Luther King Jr. holiday.

Mario Morales of the high tech research firm International Data Corp., said Intel's chips will be part of a growing trend.

"Because the market is driven by the Internet, most of the equipment is going to have to include this encryption technology," he said.

The government has made some recent moves to relax the restrictions on encryption technology.

In late December, the Commerce Department allowed U.S. companies to export technology that uses the so-called 56-bit data encryption standard or its equivalent. This standard has an unlocking key with 72 quadrillion possible combinations, but it isn't the most powerful encryption standard.

The government also allows more-powerful encryption products to be exported by specialized industries such as insurance and health care to 46 countries. It also allows sales by U.S. companies to their overseas subsidiaries.

One of the early companies to create hardware with security capabilities, Hewlett-Packard Co. said Monday that it has received approval from the Commerce Department to export its hardware-based VerSecure technology to nine additional countries, bringing the total to 17 countries representing more than 80 percent of Internet users worldwide.

Hewlett-Packard's VerSecure program head Doug McGowan said the changing status of export laws and policies makes it "very challenging for manufacturers to design strong security into exportable products."


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