Intel engages in chest-beating, threatens to yank AMD's x86 license in 60 days

Intel has formally accused AMD of breaching the terms of a 2001 cross-licensing agreement by spinning off the fabrications plants and forming GlobalFoundries.

The two sides of the argument are as follows:

• Intel: The chip making giant believes that GlobalFoundries is not a subsidiary under terms of the agreement that the two companies came to in 2001 and is therefore not licensed under the patent cross-license agreement.
• AMD: We've not breached the agreement and Intel has no right to terminate rights and licenses.

My take on this is that it's all about capacity and AMD's ability to really compete against Intel. For years, AMD has been limited by how many chips it can push out every quarter, and this has suited Intel just fine. However, by spinning off the fabs to GlobalFoundries AMD has the ability to make more CPUs for less. Not only that, AMD can start to pile the pressure on Intel when it comes to the critical die shrink war. A year to 18 months from now AMD could be in a position where it's forcing Intel to play catchup.

Remember too that Intel licenses intellectual property from AMD, such as multi-core and memory controller technology. Any serious all-out war between the two companies (above and beyond the endless legal wranglings that both companies seem to be engaged in) would be damaging to both sides.

My take here is that this is little more than posturing on Intel's part. There's no way Intel is willing to take this as far as the courts for fear of losing the x86 patent (which is how it could well have gone back in 2001 if the current agreement hadn't been reached). A new licensing deal will make all this go away. AMD will still be making CPUs 60 days from now.