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                           MOVE TO SETTLE LITIGATION

              Intel to purchase Digital's Semiconductor operations;
                   Provide foundry services for Alpha* chips

        Digital to develop systems based on Intel's 64-bit architecture

Santa Clara, Calif. and Maynard, Mass. -- Oct. 27,  1997  --  Digital  Equipment
Corporation and Intel Corporation today  announced  that  they  have  agreed  to
establish a broad-based business  relationship  that  will  provide  significant
short- and long-term benefits to both companies and their customers.

The multi-year agreement includes sale of Digital's semiconductor  manufacturing
operations to Intel for approximately $700 million, cross- licensing of patents,
supply of both Intel  and  Alpha*  microprocessors  and  development  of  future
systems based on Intel's 64-bit microprocessors. No other financial details were

Digital and Intel agreed to request a stay of all lawsuits until U.S. government
approval is granted which is required to finalize the agreement.

"This agreement meets both companies' needs," said Craig Barrett, president  and
chief operating officer of Intel. "We are pleased to get alignment with  one  of
the world's major computer companies on IA-64 microprocessors  and  to  let  the
marketplace judge our work."

"This agreement brings issues between the two companies  to  a  resolution  that
benefits  customers   in   many   important   ways,"   said   Digital   Chairman
Robert B. Palmer. "It ensures long-term availability  of  Digital's  Alpha-based
offerings for OpenVMS,  Digital UNIX  and  Windows NT  customers.  In  addition,
Digital  will  develop  Digital UNIX  and  Windows NT  offerings  on  the  IA-64

Key components of the agreement pending government approval:

- Digital and Intel will enter into a 10 year patent cross license agreement.

- Intel will purchase Digital's semiconductor operations including state-of-the-
  -art facilities in Hudson, Massachusetts as well as development operations  in
  Jerusalem, Israel and Austin, Texas for approximately $700 million.

- Digital will retain its Alpha and Alpha-related semiconductor design teams  to
  continue to develop future generations of Alpha. Intel  will  make  offers  of
  employment to other Digital semiconductor employees.

- Intel will serve as a foundry for Digital for multiple  generations  of  Alpha

- Intel will provide Intel  products  and  comprehensive  technical  support  to
  Digital consistent with practices for other major Intel OEMs.

- Digital will develop a full line of systems based on Intel's  IA-64  processor

- Digital will port, with technical assistance from Intel, its  industry-leading
  Digital UNIX to Intel's IA-64.

- Intel will obtain rights to  manufacture  and  sell  other  non-Alpha  Digital
  semiconductor products.

"Digital's mission is to deliver with our partners Internet  business  solutions
based on high-performance platforms and services," Palmer said. "This  agreement
strengthens our ability to offer products that  help  make  our  customers  more
competitive and confirms our dual Alpha and Intel platform strategy."

Digital Equipment Corporation, recognized for product and service excellence, is
a leading supplier of high-performance, Web-based computing solutions which help
enterprises compete in the global marketplace. Digital  gives  its  customers  a
winning  Internet  advantage  through  a  comprehensive  portfolio  of  Internet
solutions based on award-winning systems,  advanced  networking  infrastructure,
innovative software, and industry  applications  --  including  those  from  its
business partners. The  expertise  and  experience  of  Digital  employees  help
customers plan, design, implement, manage  and  support  Internet  solutions  in
countries throughout the  world.  For  the  latest  company  information,  visit
Digital on the World Wide Web at

Intel, the world's largest  chip  maker,  is  also  a  leading  manufacturer  of
computer, networking and communications products. Additional  information  about
Intel is available at

* Other names and brands may be claimed as the property of others.
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