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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 KeypoX on 10/9/2008 8:53:10 PM , Rating: 0
guess you for got to read you link. Where it says that a monopoly is indeed not illegal. Dont think you know everything because you watch tv and read forum posts you dumb fool.


Section 2 of the act forbade monopoly. In section 2 cases, the court has, again on its own initiative, drawn a distinction between coercive and innocent monopoly. The act is not meant to punish businesses that come to dominate their market passively or on their own merit, only those that intentionally dominate the market through misconduct, which generally consists of conspiratorial conduct of the kind forbidden by section 1 of the Sherman Act, or Section 3 of the Clayton Act.

RE: What is Intel gonna do?
By Hyperion1400 on 10/9/2008 10:52:12 PM , Rating: 5
Aye, but depending on how AMD's current case against Intel pans out, Intel may fall into, or out of, the coercive category.

I for one highly doubt Intel maintained market dominance based on merit during a five year period where AMD had a superior product.

Also, I believe personal attacks are forbade by the ToS/posting rules.

RE: What is Intel gonna do?
By vignyan on 10/10/2008 11:33:51 AM , Rating: 2
Superior product != Success in Business.

Thats the reason you go for a branded TV rather than some unbranded Japanese TV! ;)

RE: What is Intel gonna do?
By Master Kenobi on 10/10/2008 2:10:31 PM , Rating: 3
That would be unbranded Chinese TV.

RE: What is Intel gonna do?
By Pavelyoung on 10/11/2008 11:56:59 PM , Rating: 2
Not true, if AMD is indeed in violation of their agreement, then Intel has the right to relief.

Intel maintained dominance because AMD was a lesser known brand at the time. When AMD had been around for a few years, people started switching. Then AMD rested on its butt for to long and assumed that Intel wouldn't be able to catch up to them. When Intel did, AMD had nothing to counter with and were left looking stupid because of it.

Stop attacking each other. Problem solved.

"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs
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