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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 BansheeX on 10/9/2008 12:18:22 PM , Rating: 1
AMD could have invested more in fabrication, instead they spent their money on ATi, another company they can't manage. Contrary to socialist belief, one team beating another 50 to 15 and scoring half of their points off turnovers isn't anti-competitive, so I don't think using "prowess" at this point is going to get them into more trouble.

RE: Printing
By Proteusza on 10/9/2008 12:45:17 PM , Rating: 2
Yeah, but hiding your goalposts so the opponent cant score a goal is kinda dodgy dont you think? Sounds to me like you confuse socialism with fair business practices. Would you think it fair if AMD destroyed Intel's fabs with rocket launchers?

But maybe you would rather Intel own the entire market and be free to charge the prices it wants. Remember the days when Nvidias top GPU launched for $600? You can thank ATI that that isnt the case anymore.

RE: Printing
By eyebeeemmpawn on 10/9/2008 1:25:15 PM , Rating: 5
instead they spent their money on ATi, another company they can't manage

haha, managed themselves right into the lead.

RE: Printing
By jarman on 10/9/2008 3:05:18 PM , Rating: 1
Lead of what? I might agree with that argument if you referenced the 4870X2, but the 1GB 4870 certainly doesn't lead the GTX 280.

RE: Printing
By omnicronx on 10/10/2008 11:49:39 AM , Rating: 2
ATI is whiping the floor with Nvidia right now after all the trouble Nvidia has been in lately.

RE: Printing
By William Gaatjes on 10/10/2008 5:25:57 PM , Rating: 2
The purchase of ATI was not a bad move. The amount of money payed for ATI was. Thank you Hector Ruiz.

With the purchase of ATI , AMD gathered a very good team of engineers and designers and most of all a lot of knowledge and experience. And they now have a good chipset and GPU thanks to the designers of ATI. I would not be surprised if some of the ATI engineers are now helping on the future incarnation of the K10,5. AMD has a great design and engineering team but it does not hurt to have some help from fresh eyes. And having lot's of production facilities and no customers to sell your cpu's too is also not the answer. That is why AMD took Intel to court.

And that is the first start of making a foundry. If you don't need to make chips for yourself you can also make chips for others when you have the capacity(read not enough customers for your own chips). This ensures income.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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