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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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By Mathos on 10/10/2008 12:17:10 AM , Rating: 2
Adding to my previous reply, the reason I state this, is that all AMD processors since the k5 have been RISC based with the ability to decode x86 instructions on the front end. And besides, AMD has outsourced chip production many times, I could list a few, one being to motarola in the early 90s.

By the goat on 10/10/2008 8:20:16 AM , Rating: 3
Apparently you are all confused. I guess that is why you rate me down. You don't seem to understand the magnitude of the patent cross licensing between Intel and AMD.

There are many more of Intel's patents that AMD uses then just CPU architecture patents. In fact I bet the majority of the patents are manufacturing based not design based.

With every new lithography node Intel obtains, they probably generate over 1,000 patents. AMD's fabs are fundamentally designed to operate using these manufacturing methods.

Without access to the Intel patents AMD's spin off, The Foundry, will have to retool their fabs which costs money, and use less efficient manufacturing methods which costs more money.

So if AMD and The Foundry want access to the patents they will have to negotiate with Intel.

By tmouse on 10/10/2008 9:28:28 AM , Rating: 2
Intel is not the only company with manufacturing patents, IBM probably has even more; and there are many other companies that have contributed to chip processes so that is probably not an issue. I believe part of that cross license agreement was also AMD's x86 64 bit extensions which Intel chose to use when their Itanium design didn't exactly light the world on fire. If so Intel could also be forced to stop using them which would not be good for Intel. I really believe if AMD goes under Intel will be forced to split up its graphics, chipset and cpu units. Each is a major player in their respective markets and together it would not be a stretch to imagine a company with those resources presenting an impossible barrier for competitors. Either way I am sure in Europe, and more than likely the US they would face antitrust charges. The whole evil Arab empire threat being a motive for the US to not charge Intel is pure BS. The vast majority of chips for computers are now manufactured in China for Pete’s sake and chips like GPUs are just as (if not more so) technologically advanced as CPUs.

By the goat on 10/10/2008 9:59:23 AM , Rating: 3
Intel is not the only company with manufacturing patents, IBM probably has even more; and there are many other companies that have contributed to chip processes so that is probably not an issue.

In fact I recall AMD announced a while ago that their future lithography nodes will be based on IBM manufacturing methods and patents. My point is AMD's current fabs are all designed around Intel's patents. The cost to retool the fabs to get away from Intel's patents is insurmountable. The Foundry need the Intel Patents. There is no other option.

Sorry I just don't see Intel as a monopoly. Microsoft is a lot closer to a monopoly and in fact they have been convicted of anticompetitive actions (and I hate MS more then Indiana Jones hates Natzis). But even I can see Microsoft is not a monopoly.

By Mathos on 10/11/2008 12:30:53 AM , Rating: 2
Actually AMD's current Lithography process is immersion Lithography. And the next process they're switching to for 32nm is UVD immersion lithography. Most of which patents don't belong to Intel. Not to mention Intel and AMD do not use the same silicon process. AMD uses SOI based transistors with strained silicon, and a double layer mask. Intel uses Bulk silicon with a 3d transistor design in processors prior to the 45nm penryns. And with Penryn and beyond use bulk silicon with high K metal gates and dielectrics based off their own hafnium process. Even if AMD goes High K at 45nm it is going to be high k gate with low k metal oxide dielectrics. SOI based lithography processes patents are mostly owned by IBM and their joint research group, which includes AMD. Not to mention IBM has their own High k Process that AMD has access to.

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