Intel Will Pay Rival Chipmaker AMD $1.25 Billion to Settle All Legal Disputes

[nerp]

Saw it on nytimes home page. no story yet.

 

[HopJokey]

AMD stock is up 30% during pre-market so it's probably true.

 

[jvroig]

If this is true, does that mean Intel is admitting to its shady practices and instead just wants to make it all go away? I have to say, this is good for AMD since otherwise they might not see any money at all.

Or am I mistaken and this will settle AMD's disputes, but not the NY AG suit c/o Andrew Cuomo?

 

[Hyperlite]

I don't have the numbers, but roughly what percentage of AMD'S 2008 revenue is 1.25 billion?

 

[jvroig]

Here's something:

SUNNYVALE, Calif. — Intel says it is paying AMD, its largest rival in the market for computer processors, $1.25 billion to settle all antitrust and patent suits.
Intel Corp. says it has agreed to abide by a set of “business practice provisions.” In return, Advanced Micro Devices Inc. is dropping suits in the U.S. and Japan, and withdrawing complaints to antitrust regulators worldwide.

Looks like AMD suits will die, but the NY AG suit will go ahead.

 

[cganesh75]

I don't have the numbers, but roughly what percentage of AMD'S 2008 revenue is 1.25 billion?

too funny. they made $1.46B last quarter

the thing is, now they can wipe out some of the debt.

 

[jones377]

I don't have the numbers, but roughly what percentage of AMD'S 2008 revenue is 1.25 billion?

Well it's about AMD's revenue for a single quarter. I wonder what's in the new cross licencing agreement? Especially regarding AMD owning fabs..

 

[jvroig]

Better link: http://www.nytimes.com/2009/11/13/technology/companies/13chip.html

In a joint statement, the 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.”

 

[cganesh75]

If this is true, does that mean Intel is admitting to its shady practices and instead just wants to make it all go away? I have to say, this is good for AMD since otherwise they might not see any money at all.

Or am I mistaken and this will settle AMD's disputes, but not the NY AG suit c/o Andrew Cuomo?

this does mean intel is admitting to its shady practices..

 

[richierich1212]

wow

 

[Idontcare]

My first thoughts are "that's all!?"...I really thought AMD was going to shoot for bagging double-digit billions here (>10B).

But then they up and settled for a measly $1.25B? What good is 1.25B going to do? Its a drop in the bucket relative to their debt and its a drop in the bucket relative to the investment expenses and costs AMD is facing as they head into sub-22nm territory. (I'm not speaking of capex costs, that's GF's problem, I am speaking to just the development costs related to IC's of the complexity that are going to be needed beyond 22nm)

$1.25B is > 0...but this is hardly the kind of "new lease on life" that I had counted on AMD securing from the portfolio of lawsuits that are ongoing.

I wonder...does this settlement also include Intel dropping their suits against AMD, ala it means Intel now legally accepts the status of Globalfoundries as producer of AMD's CPUs without representing a violation of AMD's x86 license agreement?

If there were a number of intangibles included in the total compensation package for AMD then I suppose I could rationalize AMD settling for so little cash here.

 

[cganesh75]

i think they got out easy.. if the shady practices were not there, AMD would have made only 1.25B more for all these years??

 

[cganesh75]

Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion. Intel has also agreed to abide by a set of business practice provisions. 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.

http://finance.yahoo.com/news/AMD-and-Intel-Announce-bw-1174073159.html?x=0&.v=1

 

[jvroig]

I wonder...does this settlement also include Intel dropping their suits against AMD, ala it means Intel now legally accepts the status of Globalfoundries as producer of AMD's CPUs without representing a violation of AMD's x86 license agreement?

Apparently yes. Given so, do you think 1.25B is ok?

 

[IlllI]

1.25 is a mere drop in a bucket for a company like intel

nvm idontcare beat me to it

 

[Viditor]

Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion. Intel has also agreed to abide by a set of business practice provisions. 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.

http://finance.yahoo.com/news/AMD-and-Intel-Announce-bw-1174073159.html?x=0&.v=1

You've spotted the real big number in the mix...
"Intel has also agreed to abide by a set of business practice provisions"
Originally, the word was that AMD was willing to settle for this portion alone when they first filed. My guess is that Intel suspected that the rumoured FTC suit was going to force this on them anyway, so why not use it as a bargaining tool now while they still can.

I agree with IDC though...this is far too small a settlement based on the numbers. I just dumped all of my shares on the news.

 

[GlacierFreeze]

And to think, Intel Fanboys said AMD didn't have a case. hahaha pwned

Too bad they didn't get more. They could have and probably should have.

 

[Idontcare]

Apparently yes. Given so, do you think 1.25B is ok?

I have a lot of confidence in Dirk, and I can only assume I am operating at a distinct deficit in terms of the specifics and the details of the settlement deal, so I am inclined to assume the deal is the best AMD rationalized they could carve out for themselves at this juncture.

I'm not saying $1.25B is too little compensation for the damages AMD suffered, my prior post was probably written poorly/hastily and I did not mean to create the impression that this was/is my opinion on the settlement, but rather I am saying I presumed AMD was going to enrich themselves far better than to the tune of $1.25B for the sake of their own financial future.

This hardly changes the playing field, the rate of change in the gap between Intel and AMD remains unaffected by this settlement and it is the rate of change in the gap that is suffocating AMD slowly but surely.

$1.25B in the coffers merely delays the inevitable but changes nothing of the probabilities of what the inevitable outcome entails.

The best thing AMD could do with that $1.25B is buy Intel stock. That way they are at least hedged against Intel being the progenitor of their own demise. If AMD dies because Intel triumphs then at least the 1.25B increases in value. If AMD pulls some miracle out of their collective managerial asses then Intel whithers and so too the value of that 1.25B INTC asset but only because AMD is doing so much better.

(kind of like the move TSMC just did with SMIC, not entirely the same, by analogous in some ways)

 

[Idontcare]

And to think, Intel Fanboys said AMD didn't have a case. hahaha pwned

Too bad they didn't get more. They could have and probably should have.

dude try and avoid post-gloating if you can, you are just going to needlessly inflame people and make yourself look like an asshat in the process.

Lets talk about the ramifications and facts of the settlement and put your personal ego about being right in past threads behind us if that is not too much to ask. AMD won here, not you. Intel lost here, not people who defended Intel in the past. Separate the desire to have validation of yourself from what the actual news is communicating to us.

We'll all benefit if we can keep the thread from getting loaded up with this post-gloat stuff.

 

[jvroig]

$1.25B in the coffers merely delays the inevitable but changes nothing of the probabilities of what the inevitable outcome entails.

What is the inevitable? Previously, you mentioned in another thread that it's Intel being broken down thanks to regulators for being a juggernaut of a monopoly courtesy of reaching critical mass.

Now it seems you mean "inevitable" to be AMD dying?

 

[SunnyD]

The nice thing here is that this erases any issues remaining for the GlobalFoundries divestiture to ATIC, meaning AMD retains all existing licensing for x86 and can continue producing processors for the foreseeable future.

 

[jvroig]

AMD retains all existing licensing for x86 and can continue producing processors for the foreseeable future.

Agreed, great for AMD. Although technically, I think it's not that they retained the existing licensing, but rather made new ones. Anyway, all the same when it comes to the bottomline.

 

[Viditor]

I think that the value besides the cash is underestimated...
1. The new license agreement will most likely negate AMD's royalty payments for x86
2. The "abide by a set of business practice provisions" could mean anything, but it is almost certainly a giant restraint for Intel's marketing division and a big boon to AMD.
3. AMD can probably now sell the remaining interest in Global Foundries without a problem (or licensing issue)

Sunny D beat me to half this post I see...

 

[Lonyo]

AMD get what they need when they need it, a cash injection that will keep them going in the short term, they avoid a lengthy court battle which may end after they end.
They (presumably) get assured the right to produce CPUs at GF, rather than having any hint at all that Intel might fight over it.
Basically it's a minor victory for AMD, one that comes at a good time for them, and it's an easy win for Intel because they lose very little, but get rid of their potential issues.

Everyone knows where everyone else stands now, and AMD has a little bit more to keep going with, even if they lose out on a potentially bigger payout further down the line. I think they're still going to be happy though, since they are more comfortable than they were yesterday.

 

[PingviN]

I've been waiting for this, time for AMD to get some well deserved money for the Pentium 4/Athlon era. I suspect this is good news for AMD; they wont have to wait for the legal system to take it's time and can use this money to pay off some of it's debts.

But just because AMD drops lawsuits doesn't mean the rest of the world do. I believe Intel will have to dig deeper in the wallet before this mess clears out.