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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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this is pretty stupid
By omnicronx on 10/9/2008 1:45:14 PM , Rating: 2
Even if this is true, all AMD has to do is hold a 50.1% stake in foundry to make this perfectly acceptable. The only reason Intel is saying AMD violates the agreement is because they will no longer be in control of foundry with a 46% stake.

RE: this is pretty stupid
By Donkey2008 on 10/9/2008 2:47:05 PM , Rating: 2

With a majority ownership (>50%), won't AMD have to have submit consolidated financial statements with Foundry? Legally that is ownership, right?

Very good point Omni.

RE: this is pretty stupid
By NullSubroutine on 10/10/2008 12:58:04 PM , Rating: 2
They have 50.1% voting rights in Foundry, even though they only own 44 or 46% or whatever.

RE: this is pretty stupid
By crystal clear on 10/11/2008 4:39:22 AM , Rating: 2
This from ny earlier comment-

The Intel spokesman said the confidentiality of the terms of the Intel-AMD cross-licensing agreement prevented him from saying

"what Intel's potential issues with the ATIC deal might be."

Mulloy said that Intel had been pushing AMD to agree to

make those terms public "for months," but claimed AMD

was not willing to do so .

Nobody knows what the terms of the agreements are-just everybody is specualting & guessing.

Intel should be given an opportunity to explain-

"what Intel's potential issues with the ATIC deal might be."

To do this

AMD to agree to make those terms public

So in all fairness we all should await a full detail response from Intel provided AMD agrees to drop its objection to

to make those terms public

Now why is AMD is objecting to this ?

Is due to the fact this would send the AMD/Foundry agreement to the "trash can"


ask the UAE to send a huge cargo of petro dollars to Intel in return drop their objections to the deal.

Money gets things done....

RE: this is pretty stupid
By crystal clear on 10/11/2008 6:20:07 AM , Rating: 2
“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith
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