AMD, Intel Settle Legal Disputes

Rival chip makers AMD and Intel have settled their pending legal disputes in a deal that will include Intel paying its rival $1.25 billion and agreeing to a set of business practices. AMD officials had argued that Intel over the past few years had used anticompetitive practices to limit the use of AMD products by OEMs such as Dell, HP and IBM. The two sides also signed a new cross-patent deal.

Intel and Advanced Micro Devices have reached a settlement in all the legal disputes between the two chip makers, including antitrust and cross-license issues.

As part of the deal, Intel will pay AMD $1.25 billion and agree to a set of business practice provisions.

The two companies announced the settlement Nov. 12. Executives with both companies are scheduled to speak about the settlement at 10 ET.

"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," the two vendors said in a joint statement.

Included in the agreement is a new five-year cross-license agreement between Intel and AMD, and the two chip makers will relinquish claims that the other had breached the previous deal.

In return for the cross-patent deal and the $1.25 billion payment, AMD will drop all pending legal action against Intel, including a lawsuit filed in U.S. District Court in Delaware and two other cases in Japan. In addition, AMD will withdraw all of its regulatory complaints around the world.

The deal comes two days after Barclays Capital analyst Tim Luke suggested that a settlement in the lawsuit could be near, saying that an agreement would benefit both companies.

It would let both sides save on legal bills that already have cost the companies millions of dollars. That's particularly important to AMD, which is working to get its financial picture back in order.

For Intel, the deal means getting one legal headache out of the way. Still, the company faces other legal hurdles. The European Commission in May fined the company $1.45 billion for anticompetitive practices. In addition, the N.Y. Attorney General's Office last week filed a lawsuit against Intel that echoed the European complaints, essentially suggesting 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.

Analysts also believe that the Federal Trade Commission also could file a complaint against Intel, possibly by the end of the year.