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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: What is Intel gonna do?
By the goat on 10/9/2008 11:50:50 AM , Rating: 5
This has nothing to do with a monopoly or not. Last time I checked there are many different proprietary CPU architectures on the market. There is no requirement to allow other people to build your architecture for free.

Just because most operating systems are only written for x86 architecture does not make it special.

RE: What is Intel gonna do?
By Amiga500 on 10/9/2008 12:43:00 PM , Rating: 2
This has nothing to do with a monopoly or not.

The x86 agreement has nothing to do with monopoly.

Intel vs. AMD has everything to do with monopoly on desktop computers. Like it or lump it, that is just the way things are.

Hence why I did say it will bring other problems to Intel even if they are technically right regarding the x86 agreement.

No doubt any court case involving the x86 license would quickly expand into a wider case involving monopolies, and indeed certain anti-competitive practices.

RE: What is Intel gonna do?
By JWalk on 10/11/2008 12:25:22 PM , Rating: 2
Don't be silly. Intel isn't going to "revoke" the license agreement.

If a settlement of some kind isn't reached, Intel will simply take AMD to court for damages incurred due to the violation of their licensing agreement. If it comes to that, you can be sure that a new licensing agreement will also be drawn up as part of the final outcome of the case.

If AMD actually is in violation of this cross-licensing agreement, then Intel is well within their rights to look for legal (and monetary) compensation of some kind. AMD certainly would do the same, if things were reversed.

RE: What is Intel gonna do?
By stryfe on 10/10/2008 5:39:34 PM , Rating: 2
Intel does not allow AMD to use it's x86 IP for free. AMD has paid royalties since the terms were renegotiated in 2001.

RE: What is Intel gonna do?
By crystal clear on 10/11/2008 5:06:57 AM , Rating: 2
Within the restrictions of the "terms & conditions" of the agreement.

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