Intel and AMD Settle Antitrust, Patent Lawsuits

Kohenkatz writes "Intel has agreed to pay $1.25 billion to AMD. In return, AMD will drop its lawsuits about patent and antitrust complaints. The two companies released this joint statement: '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 press release also says, 'Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement,' and that 'Intel and AMD will give up any claims of breach from the previous license agreement.'"

Comments

Only $1.25 Billion?

[mantis2009]

Seriously, this number seems low to me. The pending suits against Intel alleged that for a decade Intel conspired to freeze AMD out of the market. Intel poisoned nearly all of AMD's potential customers. Surely that cost AMD a lot more than just a billion or so dollars in lost revenue.

Re:Only $1.25 Billion?

[Paeva]

I imagine that AMD has quite a bit to gain from the cross-licensing provision. In fact, they both do. I wouldn't be surprised if they're both worried about competition from mutual rivals such as ARM. This could be a big win for both in that regard.

Re:Only $1.25 Billion?

[Trepidity]

Intel poisoned nearly all of AMD's potential customers.

Yeah, you can bet I bought a Core 2 Duo after what happened to my coffee when I was researching a Phenom II...

Re:Only $1.25 Billion?

[drinkypoo]

Q: How did you arrive at this number

our SGNA expenses will decrease a bit on a go-forward basis

for us this has never been about money, it's about the marketplace, and there's no correlation between the settlement amount and anything... it's a negotiated number

what's important... it signals a new era, it's a pivot from war to pease, and we're trying oto redefine not only the path to a fair and fierce competitive fight in the blah blah blah tonality blah blah blah buzzword get this behind us and move forward in a very respectful way, blah blah blah

You can tell I'm listening to the webcast.

Re:Only $1.25 Billion?

[brxndxn]

As an AMD shareholder and an enthusiast who has followed this 'case' since 1999, I also think this settlement is low. I do not believe $1.25billion could bump AMD to a cash position of where it would have been if Intel had not competed unfairly. Yes, it is a $1.25billion injection of direct profits to AMD - but the cashflow through the company over the years from the marketplace to R and D would have put AMD in a much more competitive position.

Re:Only $1.25 Billion?

[Moridin42]

Except that this is 1.25 billion dollars that AMD need make no sale to acquire. No materials costs, no QC costs. No manufacturing losses. Why should AMD (or anyone else) be concerned with revenues lost? They're only a way to secure profits. This is much closer to a billion dollars of profits, which is far more valuable than a billion dollars of revenue.

Re:Only $1.25 Billion?

[Interoperable]

Possibly; however, if it ever came down to an all-out litigious patent war, AMD may well have come out on top thanks to holding the rights to the x86-64 instruction set. It's not clear that AMD gets any real benefit other than getting to put the whole dispute behind them. I suspect that the real advantage that AMD gets out of this is the admission from Intel that they were engaging in illegal business practices. Intel has agreed to stop blocking AMD from OEM sales and will probably honor it considering that they've just admitted to bad behavior.

It looks to me like AMD thinks that they can compete based on their products despite the disadvantage that Intel has put them in through illegal means. I just hope that it means we get to see some chips from AMD that once again provide a much better performance/cost ratio than the Intel chips.

Re:Only $1.25 Billion?

[jimbolauski]

So now instead of Intel screwing AMD, Intel and AMD will be screwing the consumers, it's a win win!

Re:Only $1.25 Billion?

[TheNinjaroach]

I just hope that it means we get to see some chips from AMD that once again provide a much better performance/cost ratio than the Intel chips.

AMD processors are still beating Intel in the performance/cost ratio. They have been falling behind Intel on performance benchmarks alone, but the cost is cheap enough to make AMD a clear winner when comparing performance and cost.

I'm looking forward to the time where they once again provide better performance than Intel while also toting a cheaper price tag.

Re:Only $1.25 Billion?

[hattig]

Only recently AMD was clearing some debts for 30 cents on the dollar - i.e., the banks wanted money so bad that they allowed AMD to pay back one third of the amount they were willing to clear. AMD didn't have much spare money though, so they didn't clear much.

Imagine if AMD has another such offer on the table from their banks - they could clear far far more than the money they got from Intel. Getting the money now could have an overall net benefit greater than letting such a deal expire and getting a bit more from Intel in a couple of years. Never mind the interest payments they'll save paying them off now rather than in the future, even if there is no such deal.

I think putting everything behind them, getting freedom to manufacture as they like, and having a level playing field with the OEMs (sadly at a time when AMD's offerings aren't the shiniest) is more important to them.

Re:Only $1.25 Billion?

[Locutus]

good point, I don't know what AMDs profit margins are but if they are 20%, this $1.25B would be worth $6.25B in revenue.

I thought the 5 year term was a rather short period for this kind of business where it can take that long to bring a new design from drawing board to production. In a way, I hope it doesn't give either Intel nor AMD any fire power against ARM. I'd like to finally see another hardware platform enter the desktop segment first. ie, I'd like to see ARM get a foothold before they really see viable competition. They are doing quite well in the handset segment and are due to enter the netbook segment this fall. Success there will open the door to move up the chain into the laptop segment by this time in 2011 via multi-core systems.

LoB

Re:Only $1.25 Billion?

[Enderandrew]

Not to mention Intel has already been found guilty in other countries. I think that Intel had good reason to suspect the same might happen in the US. Intel did get off light.

I assume AMD took the deal because they have been hemmoraghing money for some time now. They needed a cash influx and couldn't afford to fight a legal battle much longer.

The sad thing here is that the end lesson is that illegal, anti-competitive practices can be quite beneficial. The US government overlooked them, even when a bevy of vendors testified on AMD's behalf, despite Intel threatening those vendors. Intel profitted not only in the immediate dollar sense, but also in gaining massive market share.

Yet the US threatened to go after Google if they had a search partnership with Yahoo. That is an evil monopoly that must be quashed (but it would be fine if Microsoft purchased Yahoo, swallowed their services, and removed choice and competition from the marketplace). None of this makes much sense.

Re:Only $1.25 Billion?

[PitaBred]

And even then... since when is most desktop performance limited by the CPU any more? I bought a quad-core Phenom II for under $200 a couple months back. I have yet to feel limited by CPU speed. I mean... I have been transcoding my DVD's to insanely high quality H.264 at over 40FPS. If I transcode to an iPod format with handbrake, it'll hit over 300FPS. Why would I need to pay over double for a higher-performing i7, especially since the i7 will require new RAM and a motherboard, whereas the Phenom didn't?

Re:Only $1.25 Billion?

[mesterha]

AMD processors are still beating Intel in the performance/cost ratio.

Only if you ignore Intel processors which cost more than $200, right?

The best AMD (Phenom II X4 965) is about on par with the i5 and they cost about the same. As the CPU gets faster the price performance gets worse for Intel CPUs.

To be fair, if your buying a whole system that extra CPU cost becomes less significant. An i7-860 might be worth it if it increases the cost of the system by at most 30%. Even an i7-960 can be OK if it increases the price by at most 60%. Given that a good AMD computer costs maybe 600 then the i7-860 is probably worth it, but the i7-960 is overpriced when you factor in the motherboard.

Of course, Intel wouldn't have such good prices without AMD, so in the long run it's good to support AMD. Also most people don't really need the extra speed. If you need a new machine then a midrange AMD for around 500 is probably your best bet.

If you are really concerned about speed then just use the money you save to upgrade more often. Given Moore's law, on average, you'll have a faster machine (or at least a machine with more cores.) Also, when just upgrading, the AMD price/performance gap gets even better.

What AMD needs to do - and quickly

[haruchai]

is to get its shit together Fab-wise. They've been leading Intel for nearly 10 years in developing or deploying new tech and architecture
but Chipzilla has always been able to keep abreast because of their fabrication prowess.

Now that Intel's Nehalem architecture has all of the elements that AMD has been delivering with the Athlon and its descendants,
they're back to being the budget brand.

Now only if they would license x86 and x86-64

[Lord Byron Eee PC]

This still doesn't resolve a major problem in the chip industry and that is that these two companies have a duopoly on x86 and x86-64 chip designs due to patents. I'm not a patent lawyer, but I really don't see how Intel can possibly patent an instruction set (the implementation thereof, sure, but the instructions themselves?). Until these companies are forced to license to third-parties, we'll still see a real lack of competition.

Re:DOJ?

[Attila Dimedici]

I don't understand US law but if intel have done something worthy of an antitrust suit isn't it down to the DOJ to go after them?
Or was this some sort of civil antitrust suit?

The answers to your questions are in order: Yes and Yes.
If the DOJ thinks that Intel has done something worthy of an antitrust suit they can go after them (and the DOJ has been investigating Intel, so they still may). However, a non government entity can also bring an antitrust suit (although they have to demonstrate that they are in some way directly impacted by this behavior).

Huh? AMD's TDP is quite competitive with Intel

[Ritz_Just_Ritz]

According to Newegg:

AMD Phenom II X4 965 Black Edition Deneb 3.4GHz Socket AM3 125W Quad-Core Processor $199.99

Intel Core i7-975 Extreme Edition Bloomfield 3.33GHz LGA 1366 130W Quad-Core Processor $999.99

So I'll grant you that Intel's flagship i7 is faster than AMD's flagship Phenom II, but the Phenom has a slightly LOWER TDP and is 1/5 of the cost of the i7. Is the i7 4-5 times faster?