With Intel now under heat from regulatory authorities in both the European Union and the United States, today's announcement might be the last thing you'd expect. Nevertheless, AMD and Intel have settled all of their ongoing antitrust and intellectual property disputes. Here's the skinny from the official announcement:
Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion. Intel has also agreed to abide by a set of business practice provisions. As a result, AMD will drop all pending litigation including the case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide. The agreement will be made public in filings with the Securities and Exchange Commission.
The phrase "claims of breach from the previous license agreement" in the announcement refers to Intel's allegations that, by spinning off its chip fabrication business into GlobalFoundries, AMD had violated the cross-licensing agreement with Intel. In March, Intel threatened to revoke AMD's x86 license within 60 days if it didn't rectify that perceived breach. AMD maintained that it wasn't doing anything wrong, and it threatened to take away Intel's "rights and licenses" under the agreement, which would presumably have left Intel unable to make x86-64 processors.
AMD said in a conference call this morning that this agreement gives ATIC, the co-owner of GlobalFoundries, much more flexibility and could allow it to merge GlobalFoundries and Chartered Semiconductor, which ATIC acquired in September. This deal also allows AMD to produce all of its processors in third-party fabs, freeing it from the restriction of having to be GlobalFoundries' parent company.
The two companies commented in a joint statement about today's agreement, "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development."
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