AMD Deal Could End Intel Legal Woes

Last week's settlement of Advanced Micro Devices Inc.'s lawsuit against Intel Corp. could mark the beginning of the end of a period of antitrust litigation against the Santa Clara, Calif.-based chip maker, according to analysts.

The deal, which ends both antitrust and patent cross-license disputes, calls for Intel to pay AMD $1.25 billion and to abide by a set of business practice provisions.

For its part, AMD agreed to drop all pending litigation against Intel -- including an upcoming case in U.S. District Court in Delaware and two cases pending in Japan -- along with all regulatory complaints targeting the chip maker.

"It's good for everyone that it's over," said Martin Reynolds, an analyst at Gartner Inc. "This will make AMD a more attractive target for investors, and it's certainly good news for Intel."

The settlement came just a week after the state of New York filed the latest antitrust lawsuit against Intel, alleging that the company had threatened multiple computer makers, made payoffs and engaged in a "worldwide, systematic campaign of illegal conduct."

The Nov. 4 New York suit was seen by analysts as just one more legal problem to add to Intel's growing pile, which included the pending AMD lawsuit, another filed by Nvidia Corp., and fines of $1.44 billion and $25 million imposed by the European Commission and the Korea Fair Trade Commission , respectively, for antitrust violations.

"With AMD withdrawing all complaints, it's likely all these suits will dry up," Reynolds said. "It will be hard to go forward.

"The $1.25 billion is a downside [for Intel], but that's about it," he noted. The company and its lawyers no longer have to spend vast amounts of time and energy collecting evidence and sitting in courtrooms, he added.

The settlement could also blunt any plans by the U.S. Federal Trade Commission to jump into the antitrust fray against Intel, said analyst Rob Enderle of San Jose-based Enderle Group.

The FTC launched an antitrust investigation into Intel more than a year ago and had been expected to take some kind of action against the company soon.

Reynolds said the agreement may also encourage AMD and Intel to cooperate to address shared technical concerns, such as a need to improve virtualization capabilities in the x86 processor platform .

The two companies have an incentive to make the x86 platform as attractive as possible, particularly as they try to get customers to upgrade while the economy recovers from its deep dive. "A common standard that makes virtualization more efficient at the I/O level would move it forward," Reynolds said.

During a conference call with reporters, Intel CEO Paul Otellini called the settlement a move of expedience, and he noted that it does not include an admission of guilt.

"We have not wavered in our convictions that Intel has operated in the boundaries of the law," Otellini said. "While it pains me to write a check at any time, I think [this is] a practical settlement and a good compromise."

Thomas McCoy, AMD's executive vice president of legal, corporate and public affairs, said the settlement should set a new tone for two companies whose relationship has been "intense and emotional, and at times acrimonious, for many years." Future disputes will more likely be settled privately, he added.

Grant Gross and Marc Ferranti of the IDG News Service contributed to this story.

Copyright © 2009 IDG Communications, Inc.

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