A source familiar with the move decried the royalties as excessive. Under the plan, a three-port physical layer 1394 chip that sells for less than $5 would incur an Apple royalty of $3. "You can't have Apple make more money from a 1394 chip than the semiconductor maker does," said the source, who asked not to be named. "Eventually Apple will have to realize this is just not going to happen."

Some companies that had considered using 1394 for the first time this year have backed off until the dust settles. However, companies already committed to using the interface have not been shaken by the intellectual-property (IP) flap. The interface has already appeared in various camcorders; in PCs from Compaq, NEC and Sony; and, ironically, in Apple's latest G3 Macintosh computers. A number of consumer electronics companies are also looking at 1394 as a primary interface for set-top boxes, digital TVs and various home networking schemes.

According to one source, lawyers for Apple and Texas Instruments Inc. are debating whether TI will be charged under the royalty plan even though it has secured a flat-fee license to 1394. But a TI manager dismissed the idea that the dispute would cramp TI's longstanding push of 1394.

"The Apple IP issue in the opinion of TI is not a problem," said James Snider, worldwide strategic marketing manager for bus solutions at TI and chairman of the 1394 Trade Association. "We are not changing a single price for a single piece of silicon, nor will we change our 1394 road map at all."

Texas Instruments is said to have shipped nearly 1 million 1394 chips in the fourth quarter of 1998 and hopes to ship as many as 10 million 1394 chips this year. Other suppliers include LSI Logic Corp. and Fujitsu Ltd.