Intel, AMD Settle Business Practices and Patent Claims
Intel, AMD and GlobalFoundries Inc. announced an agreement to end AMD's lawsuits in Japan and the United States. The deal includes a $1.25B cash payment by Intel to AMD, and allows GlobalFoundries to make X86 MPUs and graphics chips for AMD. "This is a small multiple of the potential damages that a jury might have come up with," said Intel CEO Paul Otellini.
David Lammers, News Editor -- Semiconductor International, 11/12/2009
Intel Corp. (Santa Clara, Calif.) put one of its biggest legal battles behind it today, announcing a wide-ranging agreement with Advanced Micro Devices Inc. (AMD, Sunnyvale, Calif.) and GlobalFoundries Inc. (Sunnyvale) that includes provisions allowing GlobalFoundries to make X86 MPUs and graphics chips for AMD.
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Paul Otellini, Intel CEO |
Intel CEO Paul Otellini told reporters that the $1.25B cash payment to AMD protects Intel against a possible jury verdict in the anti-trust suit, which had been scheduled for trial in Delaware, that might have included treble punitive damages against Intel. "This is a small multiple of the potential damages that a jury might have come up with," Otellini said.
The Intel CEO said the cash payment, which will be made within the next 30 days, does not imply an admission of guilt by Intel, which was charged with improper subsidies, demands that customers use Intel silicon exclusively, and other business practices.
Resolution of the Intel-AMD civil cases in both Japan and the United States, however, does not end the government-led actions against Intel, including cases before the U.S. Federal Trade Commission (FTC), the European Union, and the state of New York. "We strongly disagree with statements by the New York attorney general, who unfortunately chose to distort the facts," Otellini said.
Asked by a reporter about the accuracy of emails between Otellini and Dell Inc. CEO Michael Dell, which seemed to imply that Dell had received $6B in payments to use Intel silicon exclusively, Otellini acknowledged that he had written "some of those emails, but they are being taken broadly out of context. There are 200 million pages of documents in this case, and those are just four or five snippets. The other halves of those emails will be produced as we go forward."
N.Y. Attorney General Andrew Cuomo filed a lawsuit last month alleging that Intel paid Dell Inc. $6B between 2002 and 2007 to keep buying Intel chips, even though Michael Dell contended that AMD was fielding better products.
Although Intel and AMD have had patent cross-license agreements since the mid-1970s, Otellini said they did not allow AMD to use outside foundries for MPU production. The agreement announced today includes a five-year patent cross-license that allows AMD to make its products at GlobalFoundries, and other foundries as well. "They are free to use anyone they want to to build products," he said.
In a joint statement the two companies said, "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."
Intel has also agreed to abide by a set of business practice provisions stipulated in the agreement. 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," with the filing expected sometime today, Intel said.
Intel adjusted its Q4 financial expectations to reflect the impact of the $1.25B settlement payment, saying it expects spending in the fourth quarter to be ~$4.2B, up from $2.9B. Intel will report Q4 results in mid-January.
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