Update: AMD, Intel bury the hatchet, end all legal disputes

MUNICH, Germany — In a surprise move, bitter chip rivals Intel Corp. and Advanced Micro Device Inc. announced a "comprehensive agreement" settling long-running antitrust litigation and patent disputes.

AMD's Dirk Meyer

Under the terms of their agreement announced Thursday (Nov. 12), Intel said it will pay $1.25 billion to AMD. The chip makers said they will both drop claims stemming from a previous licensing agreement and announced a new five-year cross-licensing deal.

"Today marks the beginning of a new era that shows the game has changed for AMD," CEO Dirk Meyer said during a conference call. "We are not looking for any help [from Intel], but we are not looking for them to hurt us either. The agreement gives customers freedom of action to choose and makes the marketplace open."

Under terms of the settlement, AMD said it also will withdraw all of its antitrust complaints against Intel, including pending litigation in the U.S. and Japan.

"While the relationship between the two companies had 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 two companies said in a joint statement.

The agreement also frees AMD from the requirement of operating its Globalfoundries fab venture as a subsidiary unit. The fab venture was originally set up as a subsidiary to avoid violating a previous licensing agreement with Intel.

Meyer said the landmark settlement also gives AMD the right to work with other foundries without risking its licensing deal with Intel. The companies also struck a broader range of patent cross-licensing agreements that "cover all products," according to Meyer.

With the court date for the Intel-AMD antitrust case looming, Intel again opted to settle the dispute as it did prior to an antitrust hearing before the U.S. Federal Trade Commission in 1999.

"The AMD antitrust case has been massive and threatened to become even more so as the court date approached," Intel CEO Paul Otellini said during a separate conference call. "Most antitrust cases are settled out of court not because the parties are guilty but because the costs can be so huge. That's what happened here."

As a result of the legal settlement, Intel said it adjusted its fourth-quarter financial expectations to reflect the impact of the $1.25 billion settlement payment. Intel said it now expects spending in the fourth quarter to be approximately $4.2 billion, up from $2.9 billion

(Editor's note: Watch for updates to this story throughout the day.)

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