Intel and AMD settle, agree cross-licensing deal

Intel will pay AMD $1.25bn and the two companies will share patent rights for the next five years, while AMD has cancelled all antitrust litigation against Intel

Intel and AMD have settled all outstanding legal disputes between the two companies and have signed a five-year intellectual-property cross-licensing deal.

The settlement, announced on Thursday, also ends antitrust litigation against Intel that resulted from Intel's alleged anti-competitive practices in trying to shut AMD out of the processor market. In the deal, Intel will pay AMD $1.25bn (£755m).

According to a joint statement from the two companies, Intel and AMD will share patent rights across all their products in a new five-year cross-licensing agreement, and both companies will give up any claims of breach from their previous licence agreement.

One key disagreement between the two companies has involved Globalfoundries, the foundry joint venture between AMD and the Abu Dhabi government that AMD has considered to be a subsidiary. As part of the new deal between AMD and Intel, Globalfoundries will be restructured so that it is no longer and AMD subsidiary.

AMD will drop its pending lawsuit against Intel in the US District Court in Delaware, as well as two cases pending in Japan and all its regulatory complaints against Intel worldwide. However, this does not necessarily end cases against Intel that have been brought by regulators themselves.

"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," the companies said.

Intel has already been ordered to pay a €1.06bn fine over its anti-competitive practices this year, when the European Commission found the chipmaker had illegally tried to dissuade PC manufacturers and retailers from using AMD's rival products.

According to Thursday's statement: "Intel has also agreed to abide by a set of business practice provisions". Intel chief executive Paul Otellini said in a conference call that Intel already followed those provisions, and there would be no change in Intel's behaviour as a result. "There will be no changes at all. AMD says we do things we say we don't do. We've written down what we won't do."

There would be quarterly meetings between the companies to address disagreements, he said, with agreed mediation and arbitration steps. "We will resolve [these differences] as business people instead of through the courts", he said.

In a separate conference call on Thursday, AMD chief executive Dirk Meyer said he hoped the new ground rules would "define the path to a free and open market in the microprocessor industry".

"[The agreement] represents the culmination of many years of litigation and regulatory engagement and we are optimistic that it will usher in a new era for our industry," Meyer said. "We would like to thank the regulatory agencies around the world for their diligence and consistency. Their work has enabled us to achieve this milestone."

Tom McCoy, AMD's head of legal and regulatory affairs, said in the call that AMD's legal actions against Intel had "never been about the money", but were about creating a "fair and fierce" competitive marketplace.

"Intel can't use inducements to force exclusive dealing, delay companies from using our products, delay or hinder companies from advertising or using our products," McCoy said. "Compilers will not artificially impair the performance of our products."

McCoy described Intel and AMD's relationship as "intense and emotional and at times acrimonious for all too many years". He said the two companies would, in future, try to resolve their differences "before spilling into the courts and the public affairs domain".

"Both parties intend this agreement to be an opportunity to pivot the relationship and go forward in a very classy way," McCoy said.

However, McCoy indicated that not all disputes between Intel and AMD had been resolved as part of the agreement.

"There are some exceptions," McCoy said. "There are some practices that we believe are exclusionary. Under the agreement, there is a narrow set [of issues] that we will continue to advocate to the regulators should be addressed for the health of the industry."

McCoy said that, while Intel had agreed to stop making inducements to retailers and manufacturers conditional on limiting use of AMD products, AMD and Intel did not have agreement on "Intel's freedom to enter into retroactive rebates and discounts".

However, McCoy noted that existing regulatory decisions against Intel, such as that made by the European Commission, would force Intel to desist from these sorts of practices.

When asked about the IP sharing agreement, which would allow the companies to use each other's patents, Otellini said there was little change from the previous agreement. "There's really no change on the patent side", he said. "There was a clause that limited the outsourcing capabilty under some conditions. [That] has been removed from the agreement. They [AMD] are free to use anyone they want to build their products".