The agreement that ended the bitter and costly legal battle between AMD and Intel gives both companies the chance to focus on their future plans, according to analysts. It also gives OEMs like Hewlett-Packard, Dell and IBM greater freedom in deciding which chips to put into their products. However, while the legal battle with AMD may be all but over, Intel still has regulators to deal with.
Ultimately, it was in the best interest of both Advanced Micro Devices
to end their long and contentious legal dispute.
After eight years of court battles and seven months of negotiations, the two
chip makers reached a deal
Nov. 12 to settle the antitrust claims AMD
had leveled against Intel, and Intel's charges that AMD
had breached the companies' cross-licensing agreement when it spun off its
manufacturing business to create Globalfoundries.
The two companies had spent millions of dollars in court costs, generated
200 million pages of evidence and conducted 2,200 depositions, and were still
five months away from reaching trial.
The 10-year settlement includes a $1.25 billion payment by Intel to AMD
and an agreement regarding anticompetitive business practices that cannot be
And it means AMD can free itself from
having Globalfoundries as a subsidiary, and enables AMD
to use Globalfoundries or any other manufacturing company without fear of
violating a new five-year cross-licensing agreement with Intel.
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On a larger scale, the industry now can benefit from having two of its key
players be less distracted by court battles and more focused on innovation and
developing products, according to analysts.
"It's really good for the industry in general," said Roger Kay, an
analyst with Endpoint Technologies Associates. "Both companies had devoted
a lot of top management to the fight. It's pretty distracting. You really want
top executives concentrating on the business at hand."
Top executives for the two companies said they saw the settlement as
positive, although for vastly different reasons. AMD
CEO Dirk Meyer and Tom McCoy, AMD
executive vice president for legal, corporate and public affairs, said the deal
means a freer and fairer market in which AMD
can sell its wares.
"This has never been about money," McCoy said in a conference call
with reporters and analysts. "It's a pivot from war to peace. We're trying
to [create a] path to fair and fierce competition in the marketplace."
The settlement also gives AMD much-needed
money as it looks to pay down debt and stabilize its financial picture.
For Intel, it made sense to settle the dispute rather than take its chances
with a judge or jury trial, where the company risked triple damages if found
guilty. Intel CEO Paul Otellini stressed
that despite the settlement and the payment, Intel was not saying that AMD's
claims were legitimate.
"Throughout this process, we have not waivered in our contention that
Intel has acted within the boundaries of the law," Otellini said, noting
that in the United States,
98 percent of all antitrust cases are settled before reaching trial.
"Antitrust cases are incredibly complex and ... a jury trial has its own
vagaries. While it pains me to write a check at any time, in this case, I think
we made a practical settlement."