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AMD says the split into two companies doesn't interfere with the agreement

AMD and Intel are rivals in the marketplace when it comes to x86 compatible CPUs and graphics processors. AMD and Intel have a cross-license agreement in place that allow AMD to use Intel IP to build x86 compatible processors.

On October 7, AMD announced that it was splitting its holdings into two separate companies. AMD will continue as a designer of CPUs and GPUs. The other company is called The Foundry and will be responsible for manufacturing chips for AMD and other companies.

The new company starts with AMD's chip fabs and the chipmaker will retain a 44.4% stake in The Foundry. The remaining 55.6% of The Foundry will be owned by a pair of Abu Dhabi companies that together invested $5.7 billion.

BetaNews reports that Intel issued a statement saying that it will be investigating whether or not the split of AMD and AMD's resulting minority stake in The Foundry violates the heavily redacted licensing agreement that allows AMD to design and manufacture x86 compatible CPUs.

The issue in the eyes of Intel is that the original licensing agreement granted AMD a non-exclusive, non-transferable license for x86 technology. Intel feels that with AMD splitting in two and now only owning a minority stake in The Foundry where Intel's IP will be used will not give AMD the control over the IP as stipulated by the agreement.

Intel's Chuck Malloy told BetaNews, "We have an obligation to our shareholders that we protect our intellectual property. We want to make sure their interests have been taken into consideration."

AMD for its part believes that it is not in violation of licensing agreements in place between it and Intel. AMD's Michael Silverman told BetaNews, "We are completely confident the structure of this transaction takes into account our cross-license agreements. Rest assured, we plan to continue respecting Intel's intellectual property rights, just as we expect them to respect ours."

According to eWeek, Hans Mosesmann, a financial analyst with Raymond James, believes that Intel could use the split of AMD and transfer of its IP to The Foundry to pressure AMD to drop long-standing lawsuits it has against Intel.

Mosesmann wrote, "AMD, in our view, is likely violating the Intel x86 cross-license, but we suspect Intel may look the other way as it benefits Intel to have an AMD that will over time have increasing variable costs (good for ASPs). Intel may choose to entice AMD to drop the anti-trust suits against Intel in return for this altruistic gesture.”

It appears that Intel is pressuring AMD to release a non-redacted version of the licensing agreement to the public, at this point only the heavily redacted version is available. AMD maintains that releasing a non-redacted version of the license agreement is not going to happen.

AMD spokesman Phil Hughes said, "It’s a business document and we are not going to negotiate this in the press or the media. This is something that the lawyers have to work out.”

That statement and Intel's willingness to release the full version of the licensing agreement could certainly make it seem AMD knows that it is violating the license agreement it has in place with Intel in some minds.

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RE: Printing
By Ratinator on 10/9/2008 11:26:02 AM , Rating: 2
One prints data the other technology. Intel's issue here is it doesn't want any secret technological information to fall into a third party's hands where they could potentially stand to gain from it. There is most likely specific details only known to Intel and AMD and having a third party in there can cause more issues over secrecy.

It's like having an affair. AMD, by splitting off, is in essence bringing in a third party to a relationship between AMD and Intel. Some people like the menage et trois....but when it comes to technological information, most won't want to share.

RE: Printing
By Segerstein on 10/9/2008 11:43:23 AM , Rating: 3
It is x86 instruction set + SSEx that's licenced. Internally K8/10 are quite different beasts from Intel's Core/Atom architectures.

Why doesn't TSMC, following this logic, produce its own GPUs by now? Besides, AMD used Chartered to help produce Athlons a few years ago.

RE: Printing
By djc208 on 10/9/2008 1:24:00 PM , Rating: 2
In those cases I'm sure the agreement between the two companies would prohibit TSMC from using any of the designs they were given for their own purposes.

Intel is saying that they don't know if their agreement holds between the new branch off AMD. Like if TSMC decided to make a seperate company that designed GPUs. The AMD/TSMC agreement might not apply to them specifically, but they would have had access to all the same info before they left.

Now a company like TSMC or similar would be stupid to try it since they would only get away with it once. Then no company would work with them again. Since they didn't develop the designs they stole, the designs would quickly go out of date and be useless leaving them with nothing to produce.

As you said, I don't know that the IP in question applies at all to manufacturing tech, otherwise AMD wouldn't be a generation behind Intel on the nm front. But it may provide the pressure Intel wants and they don't pay all those lawyers to do nothing.

RE: Printing
By Oregonian2 on 10/9/2008 4:09:48 PM , Rating: 2
How things fall can make a big difference. If the manufacturer of the chips (Foundary in this case) "has" an x86 IP license, then that will allow them to manufacture x86 chips for companies other than AMD as well (this sort of thing has happened in the past for other products).

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