Legal Disputes Settled, Intel, AMD Look to Future

Ultimately, it was in the best interest of both Advanced Micro Devices and Intel to end their long and contentious legal dispute.

After eight years of court battles and seven months of negotiations, the two rival 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 used.

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."

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