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AMD and Intel make nice
2009-11-12 Article Rating:  / 0
Intel and AMD have agreed to bury the hatchet, setting aside long-standing cross-licensing and antitrust disputes. As part of the deal, Intel will pay AMD $1.25 billion and agree to a "set of business practice provisions," the chipmakers announced jointly.
"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 and AMD said in a joint statement. "It's a pivot from war to peace," AMD chief legal counsel Tom McCoy reportedly said in a conference call held this morning to discuss the agreement. "This has never been about money. It's about the marketplace." For some years, Intel has been accused of using a "combination of bribery and coercion" to get PC manufacturers to use its processors instead of those from AMD. At the same time, the two chipmakers have engaged in ongoing patent battles -- intensified by AMD's spinoff last year of its manufacturing operations into a subsidiary called GlobalFoundries. Under the terms of today's pact, AMD and Intel said, they're entering into a new five-year cross license deal, and will also give up any claims that the previous license agreement had been breached. In addition, Intel will pay AMD $1.25 billion and has agreed to abide by a "set of business practice provisions" (not immediately detailed). As a result, the chipmakers added, AMD will drop all pending litigation, including a case in U.S. District Court in Delaware, and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide. It's said the agreement will be made public in filings with the Securities and Exchange Commission. The deal lets both AMD and Intel save on legal bills that already have cost the companies millions of dollars. That's particularly important to AMD, which, according to Reuters, has $3.2 billion in debt, and reported a net loss of $128 million for the third quarter -- its 12th consecutive quarter in the red. Remaining battles As for Intel, it still faces other legal hurdles, as writer Jeffrey Burt notes for our sister site eWEEK.com. For example, via a ruling that is currently being appealed, the European Commission in May fined the company 1.06 billion Euros (about $1.45 billion) for anticompetitive practices. Last week, Burt adds, the New York Attorney General’s Office filed a lawsuit against Intel that echoes the European complaints. The suit essentially suggests that Intel used a combination of bribery and coercion to ensure that OEMs -- including Dell, Hewlett-Packard and IBM -- limited their use of AMD products, he writes. In June, meanwhile, the Federal Trade Commission (HTC) launched a formal antitrust investigation of Intel. Many analysts believe the FTC could file a complaint against the chipmaker by the end of the year, Burt reports. Former FTC policy director David Balto is reported by the IDG News Service as saying via email, "The job is not done. Although the settlement may eliminate some barriers, FTC action is necessary to assure long-term relief in this market, that competition is fully restored, and that consumers have the benefit of an open market." As a result of the legal settlement, Intel adjusted its fourth-quarter financial expectations to reflect the impact of the $1.25 billion settlement payment. Spending is now expected to be approximately $4.2 billion, up from $2.9 billion, the chipmaker said. Meanwhile, AMD shares reportedly surged by more than 25 percent. Intel CEO Paul Otellini was reported by The Wall Steet Journal as saying, "While it pains me to write a check at any time, in this case it made a practical settlement, and it was a good compromise between the two companies. And in many ways, it was a small multiple of the potential damages that could be awarded in a jury trial." Market share According to an IDC report announced earlier this week, during the third quarter of 2009, Intel was responsible for 81.1 percent of the worldwide PC processor market's unit shipments, a gain of 2.2 percent. AMD, meanwhile, was said to have earned 18.7 percent, a loss of two percent, while Via Technologies earned just .2 percent. In 3Q09 by form factor, Intel earned 88 percent share in the mobile PC processor segment, a gain of 1.1 percent, AMD finished with 11.9 percent, a loss of 0.7 percent, and Via earned 0.2 percent, IDC said. In the PC server/workstation processor segment, Intel finished with 90.4 percent share, a gain of 0.5 percent, and AMD earned 9.6 percent, a loss of 0.5 percent, the report added. In the desktop PC processor segment, Intel earned 72.2 percent, a gain of two percent, and AMD earned 27.4 percent, a loss of 1.9 percent. Via's share was highest here, at 0.3 percent, according to IDC. Jeffrey Burt's eWEEK story on the AMD-Intel settlement may be found here. A Reuters report on the settlement may be found on The New York Times' website, here. Coverage by The Wall Street Journal may be found here, and a BusinessWeek article quoting AMD's Tom McCoy can be found here. The IDG News Service report quoting ex-FTC official David Balto may be found here. Related Stories:
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