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  (Source: softsailor.com)
Intel, AMD kiss and make up

Intel and AMD have been involved in long-standing dispute over intellectual property and antitrust issues. Intel was fined $1.45B by the EU for its anticompetitive practices and last week, New York Attorney General Andrew Cuomo filed an antitrust lawsuit against Intel.

Cuomo had rather harsh words for Intel, stating, “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market. Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”

However, Intel and AMD now appear to be making amends. The pair issued a joint statement today which reads, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

As a part of the settlement, Intel will pay AMD $1.25 billion, AMD will drop all of its pending lawsuits against Intel, and the pair will enter into a new 5-year cross license agreement. In addition, Intel will "abide by a set of business practice provisions" in the future.

AMD CEO Dirk Meyer today championed the agreement, stating, "Today, I am pleased to announce the last major component of that transformation – in the form of a transparent and public agreement with Intel to create a level playing field in the x86 processor industry – taking us one big step closer to achieving our bold vision."

Meyer continued, adding, "Today marks the beginning of a new era... one that confirms that the game has changed for AMD. It is an important milestone for us, for our customers, our partners, and most important – for consumers and businesses worldwide. In addition, it represents the culmination many years of litigation and regulatory engagement."

Following the announcement, AMD shares are up 25 percent to $6.61 while Intel is up almost a percentage point to $20.05 as of 10:00 AM EST.



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Should have Held Out for more Cash
By Sahrin on 11/12/2009 10:09:41 AM , Rating: 5
Good news, but AMD could've gotten a lot more money at trial. My thinking is (though I certainly hope it's not true) that AMD's situation is pretty fianncially bleak. A meager 5 year extension of the cross-licensing agreement and 1 and a quarter B?

That aside, there's the moral satisfaction and vindication that your struggles over the last 30 years have been, at least in part, attributable to your competitor stealing from you by bribing your customers.

Nothing against Intel, but the 1.5B plus 1.25B paid to AMD comes nowhere near the extra profits driven by (relatively) higher prices they've created through their illegal behaviour.

Kudos to AMD. Now let's get this behind us and move Bulldozer up a year and get back to kicking Inte's tail where it matters - in the benchmarks.




RE: Should have Held Out for more Cash
By Amiga500 on 11/12/2009 11:05:51 AM , Rating: 3
I agree.

Considering Intel is supposed to have paid over $10 BILLION to Dell alone, it is not unreasonable to expect AMD to have gotten much more out of Intel in fines.

Although, I suppose one could argue that not all of the money from fines would have found its way to AMD's bank account, if any.

I think this was a bad move by AMD IMO.


By Nehemoth on 11/12/2009 11:17:13 AM , Rating: 5
The same here. That's no a huge sum of cash as I was expecting.

Course maybe this was the best move, we must remember that AMD have to pay lawyers, Intel is getting strong and AMD needs money NOW, and of course Intel knows this.

Maybe this was the reason behind the deal right now.


By just4U on 11/12/2009 11:23:22 AM , Rating: 5
I don't feel that it was a bad move for AMD at all. Sure they could have squeezed more but it's probably unlikely it would have gone as high as 10 Billion. As it stands they have a new cross licensing agreement and over a Billion more in funds... "NOW!" That's key to remember as this lawsuit could have dragged on for many years rather then being settled now.

In reading this article .. I was happy for AMD.


RE: Should have Held Out for more Cash
By rs1 on 11/12/2009 3:32:53 PM , Rating: 5
I see your reasoning, but I can also see AMD's strategy here:

1. They need cash NOW. They might have been able to get more cash later, but what good is that if it takes so long that AMD is no longer a viable company when it finally does get the cash. Court cases take a long time, and consume a significant amount of resources while they are ongoing.

2. Under the agreement, Intel drops its licensing suit, which AMD would probably have lost. AMD saves a bunch of extra money by not having to defend itself in this suit, and also no longer has to worry about either getting cut off from its x86 license or being forced to renegotiate at extremely unfavorable terms. Given that AMD's business is built around selling x86 CPU's, this is hugely important for them.

3. AMD doesn't have anything all that impressive on their roadmap until 2011. Now is a good time for them to be taking a cash infusion from Intel, even if it is a smaller one. It ensures that the company should be able to survive through 2010 so that maybe they can become competitive again in 2011 if they manage to stick to their plan.

I think AMD's settlement was aimed more at preserving their ability to compete successfully with Intel in the future than it was at maximizing the amount of cash extracted from Intel. The two goals are slightly different.


By ajfink on 11/12/2009 6:56:34 PM , Rating: 2
AMD never would have lost an x86 licensing suit - it would immediately lead to a practical monopoly.


By Proteusza on 11/12/2009 11:14:54 AM , Rating: 3
I think thats the point though.

I mean, Intel probably said something along the lines of:

"We both know that we're guilty and you can probably prove it in court. But long term, this legal battle is something you cant afford in your present state. Give it up, and we'll admit you were right and give you these trinkets to seal the bargain."

Doesnt mean much to Intel but will help AMD's bottom line quite a bit.


RE: Should have Held Out for more Cash
By Mint on 11/12/2009 12:24:33 PM , Rating: 4
Anti-trust is not something that's easy to win. For example, rebates to Dell are nothing more than a volume discount with different financing.

Moreover, it's rare that the company suffering from the actions gets a decent chunk of the fines. I don't think the EU gave anything to AMD.

$1.25B is a pretty strong admission of guilt. Intel would rather avoid paying $2-5B to the DoJ, and AMD would rather get $1.25B instead of nothing. Everyone's happy.


RE: Should have Held Out for more Cash
By Sahrin on 11/12/2009 2:06:52 PM , Rating: 4
It sounds like you're making the mistake of confusing a criminal case with a civil one. This is *not* anti-trust. AMD is suing for damages, not filing criminal charges for anti-trust violations.

All AMD has to do is get the jury to agree that it's troubles were even remotely related to Intel's actions. Intel has earned well over 250 Billion in revenue since 1999 - if AMD were to even get an integer percentage of that (likely what they would be awarded by a jury - damages plus (percent culpability times revenue)) it would blow away the settlement being agreed to.

A company never gets a chunk of fines, fines are damages done to the public - not damages done to a private enterprise. AMD's only recourse to get money is to sue Intel itself for violating the law. My point was to say that Intel is 'getting off easy' relative to their crime, not that AMD had experienced a windfall (or missed out on one).

An out-of-court settlement will as a rule include *NO* admission of guilt. Intel is paying AMD to shut up, not paying AMD because they were wrong.

This does *nothing* to help Intel with the DoJ. If they broke the law (violated anti-trust laws and injured the marketplace) the Justice Department's responibility is to protect the people (not private enterprise) from law-breakers. Intel will be held responsible for the damage done to the market, not to AMD - and no amount of paying off AMD will protect it from that (should justice decide to pursue a case against Intel), which at this point is pretty much a given. This is the kind of case a US Attorney can make his career (all the way up to SG or Assistance AG) on.


RE: Should have Held Out for more Cash
By sonoran on 11/12/2009 2:52:54 PM , Rating: 2
quote:
Intel has earned well over 250 Billion in revenue since 1999 - if AMD were to even get an integer percentage of that

Are you arguing that Intel was not entitled to compete for ANY of the x86 processor market share over this time? That's the only way your total revenue figure makes any sense. How about subtracting the percentage of the total market they are legally allowed to compete for? And good luck defining what that is, since no law on the books codifies that percentage - what's "allowed" and what's not is all up to interpretation.


By Sahrin on 11/12/2009 3:14:00 PM , Rating: 2
I wasn't arguing anything like that, I was using it as an arbitrary basis for possible damages. I wouldn't be surprised if AMD would use that as a baseline figure (Intel's total revenue during that period was...we believe Intel's actions denied AMD an approximate 10% of market share over 10 years...thus we should be entitled to 10% of revenue, plus triple damages...but we're not greedy - so we'll settle for the $25B).

Probably, AMD would end up getting something in the high singles to low teens - not less that $5B, not more than $12-13B. Of course, they probably wouldn't get paid for 10-15 years, but there it is. My bet would be $7B when all was said in done.

Of course at this point it's all academic.


RE: Should have Held Out for more Cash
By nafhan on 11/12/2009 12:39:37 PM , Rating: 2
Don't forget that they got the cross-licensing agreement out of this, too. Thanks to their IP, AMD is in a much better position than nVidia, but if they'd had gotten tied up in court seperately over the cross licensing, it could have caused major problems for AMD.


By Mr Perfect on 11/12/2009 12:52:47 PM , Rating: 2
I don't think I'd count the license agreement for much. From what Anandtech and others have said, it's pretty much a given that these agreements get extended. Intel owns x86, and AMD owns the x86-64 extensions. If either party doesn't extend the licenses, it's damn sure the other guy won't either and then nobody's chips are in license.


RE: Should have Held Out for more Cash
By Calin on 11/12/2009 12:57:33 PM , Rating: 2
5 years from now, when everyone will use 64-bit software, Intel will want to continue the cross licensing agreement.


RE: Should have Held Out for more Cash
By Supa on 11/12/2009 1:27:01 PM , Rating: 2
At least it's a positive news.

Although considering that AMD lost over $3 billions last year, and over $3.3 billions the year before, it makes you wonder how long $1.25 billion will last.

---


By CyborgTMT on 11/13/2009 1:49:39 AM , Rating: 2
Well both of the previous losses were mostly due to the ATI deal. Current losses for AMD are mostly related to Global Foundries. As said on Anand had AMD fully split from GF, they would have turned a profit last quarter. So I would be willing to say that after the 1.25 bil. from Intel and cash of selling of their part of GF, AMD is going to be sitting pretty good for a while.


RE: Should have Held Out for more Cash
By Reclaimer77 on 11/13/2009 3:06:04 AM , Rating: 2
I'm curious. Since we know at the time AMD's production lines were already maxed out, and they could barely deliver product for what demand they had. How were they going to make billions more in OEM sales if they couldn't meet demand ??

I think you guys should be happy that AMD extorted this much from Intel.

quote:
That aside, there's the moral satisfaction and vindication that your struggles over the last 30 years have been, at least in part, attributable to your competitor stealing from you by bribing your customers.


Completely unfounded and unproven statement. And since they didn't go to trial, you sure as hell can't state this with utter certainty.

quote:
Nothing against Intel , but the 1.5B plus 1.25B paid to AMD comes nowhere near the extra profits driven by (relatively) higher prices they've created through their illegal behaviour.


Right, nothing against INtel, but AGAIN you slander their name with unproven accusations. Also you fail in understanding economics, Intel didn't create prices, the market did. What's rule number 1 ? A good price is one that the consumer is willing to pay.

And before you bring up competetion, AGAIN, my original point. There wasn't going to be more competition because AMD could NOT deliver more product. It's that simple.


RE: Should have Held Out for more Cash
By Silver2k7 on 11/13/2009 4:22:58 AM , Rating: 2
"Intel didn't create prices, the market did."

Yeah a market with only 2 competitors.. thats nothing compared to most other markets.


By xaders on 11/13/2009 6:17:48 PM , Rating: 1
i agree and should got more out of it. like another billion or two. should have asked for more.

intel is clone amd technology with the i5/i7 CPUs. intel isnt called their CPU lines pentium 5, now, CPU speed is rated on models & performance instead of CPU speed, & etc. you can thank that to AMD.

overall, if company need newer & better products, they need R & D spending. basically, you need to spend money to make money.


By Sahrin on 11/13/2009 11:44:51 AM , Rating: 2
You're confusing my supposition cases with statements of fact. While I do believe that it's fact that Intel broke anti-trust law and caused harm to AMD and the marketplace in doing so and I also think you're blind if you can't see that (based on what INTEL executives have said), I am not guaranteeing an outcome; I am extrapolating one.

quote:
I'm curious. Since we know at the time AMD's production lines were already maxed out, and they could barely deliver product for what demand they had. How were they going to make billions more in OEM sales if they couldn't meet demand ??


First of all, the range of time we're talking about extends all the way back to the K7 (not just K8). Up until Northwood, AMD had the performance lead over Intel in most applications, and got almost *zero* design wins. If AMD had gotten those design wins, they'd've had the revenue to invest in greater production expansion, etc.

That aside, AMD had already put in place agreements to expand production up to 50% of desktop shipments (see: Chartered Semi). This was never fully implemented, because the orders never materialized, because Intel bribed AMD's customers not to buy AMD. The EU has already determined this happened in Europe. There is no conviction in the US (just a bunch of lawsuits and criminal charges filed), but given that Europe is a much stricter regulatory climate than the US (*especially* in the period we are talking about) what is it about Intel that makes you think they wouldn't use the same tactics here? I agree that "guilty in Europe" does't equate with "guilty in America" - but combine "guilty in Europe" with "openly stated they were concerned their behaviours violated anti-trust laws in e-mails" and "execs of OEM's openly stated they were be retaliated against financially if they bought from AMD" and you get: guilty in America.

AMD's case would've been: if the market would've been free, we would have HAD the production capacity. You're presupposing a situation that didn't exist: AMD could've supplied to Dell, et al. They couldn't've - even if they *had* the capacity, because Intel would've bribed the OEM's away.

quote:
Completely unfounded and unproven statement. And since they didn't go to trial, you sure as hell can't state this with utter certainty.


That's true, I did not present any foundation or proof in my post. But since it's a supposition predicated on the information presented in the article the comment appears directly under, I thought you would pick up on it there. My bad. I'll be sure to re-post the text of the article in my comments for your benefit heretofore.

quote:
Right, nothing against INtel, but AGAIN you slander their name with unproven accusations. Also you fail in understanding economics, Intel didn't create prices, the market did. What's rule number 1 ? A good price is one that the consumer is willing to pay.


First of all, slander is spoken. Since I don't talk as a type (...most of the time), you mean to accuse me of libel - which again, I am not guilty of because libel or slander is to present false information as factual. The information is neither presented as factual nore false; it is my opinion and it is almost certainly true (though I leave room for the extremely unlikely possibility that it is incorrect).

And AGAIN, you are confusing two fundamental but equally seperate concepts of economics: Competition and Supply and Demand. Supply and Demand has *nothing* to do with competition - it is a macroeconomic force which is based on availability and consumption. When you say AMD 'couldn't've possibly supplied the chips' (which is false, by the way) - this doesn't have anything to do with whether "AMD's products were competitive with Intel's." It's that simple. You concede this point right up front when you try to turn it into a conversation about supply (otherwise you would say "AMD's parts suck" not "AMD couldn't make enough of them") and not competition.

Competition is about having a superior product to your competitiors...supply is about product existing on the marketplace. Low supply itself, believe it or not, is not against anti-trust law, because generally speaking it is not illegal to not be able to make enough of your products. It is, however, illeagal to ration your customers' consumption from other suppliers by imposing financial penalties for buying from your competitors in the first place.


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