Intel pays out $1.2 billion to chip maker rival

Intel is paying Silicon Valley rival Advanced Micro Devices (AMD) $1.25 billion (£749 million) to squash a legal battle over Intel's sales tactics, a rift that led to antitrust charges against Intel in several countries and was headed toward a costly and nasty trial next year.

The settlement announced Thursday between Intel and AMD - whose microprocessors serve as the brains for nearly all personal computers - doesn't let Intel off the hook. It still has to deal with the antitrust charges that AMD pressed governments to file.



The biggest case is in Europe, where regulators have fined Intel a record $1.45 billion (£869 million) over what they described as Intel's illegal tactics to bully PC makers into choosing Intel chips over AMD's. EU spokesman Jonathan Todd said that the European Commission "takes note" of Intel's settlement with AMD but that it does not change Intel's duty to comply with European antitrust law.



Intel is also fighting an $18.6 million (£11.1 million) fine in Korea and a federal lawsuit filed last week by New York Attorney General Andrew Cuomo, who accused Intel of abusing its dominance to "rule with an iron fist." The US Federal Trade Commission also is investigating.

The settlement does allow Intel to duck a trial set for March in Delaware over a federal lawsuit AMD filed in 2005.



"While it pains me to write a cheque at any time, in this case I think it was a practical settlement," Intel CEO Paul Otellini said on a call with analysts. "And it was a good compromise between the two companies. And in many ways it was a small multiple of the potential damages that could be awarded in a jury trial."



AMD shares soared $1.15, or 22 per cent, to $6.47 in afternoon trading. Intel shares fell 1 cent to $19.83.



The lawsuit reflected AMD's long-standing accusation that Intel has kept AMD's market share from rising no higher than about 20 per cent by threatening PC makers and offering financial incentives for avoiding AMD chips. AMD's lawsuit quotes one manager from Toshiba comparing Intel's incentives to "cocaine." It also cites executives from Gateway complaining that Intel's threats of retaliation for working with AMD beat the executives "into guacamole."



Intel has defended its practices, saying it simply offered rebates to big customers, which allowed them to pass lower PC prices on to consumers.



It's not clear how much of Intel's behavior will change under Thursday's deal. Intel agreed to "abide by a set of business practice provisions," and AMD said the changes resolve its concerns "to a great extent." But Intel says that as part of the deal it will refrain from giving financial incentives to companies that limit their use of AMD chips -- which the company had always said it wasn't doing anyway.



The settlement has precedent. In 1995 the companies, which are headquartered mere miles from each other, made peace over different issues. That deal gave AMD the right to keep producing chips based on a design known as the "x86 architecture," which both companies still use today.



A trial over the latest issues could have been dangerous for both companies.



Intel risked heavy penalties if it lost. A verdict for AMD also could have increased the momentum for cases like those that have come in Europe, New York and Korea.



Meanwhile, AMD, which is struggling to whittle $3.7 billion (£2.2 billion) in debt and pull off a major restructuring, could have found the trial prohibitively expensive. The companies have not said how much they have spent on legal fees related to the case, but it's easily in the tens of millions of dollars.



Intel also had a cudgel against AMD. AMD's restructuring has included the spinoff of its manufacturing arm to cut costs, a move that Intel says violated the x86 licensing agreement. AMD argued the spinoff didn't need a new license to make chips that incorporated Intel's technology, but Intel argued it did.



That spinoff is critical to AMD's turnaround after it lost billions while trying to compete dollar-for-dollar against Intel in developing advanced manufacturing techniques, a fight AMD ultimately conceded it couldn't win.



Under the terms of the new agreement, AMD and Intel entered into a new, five-year cross-licensing deal. Intel dropped claims that AMD breached the earlier agreement. And AMD is dropping all litigation against Intel and withdrawing its regulatory complaints worldwide.



"It is a pivot from war to peace," said Tom McCoy, AMD's top lawyer.



Intel said that with the $1.25 billion settlement, its spending in the current quarter will now be $4.2 billion (£2.5 billion) rather than the $2.9 billion (£1.7 billion) it had previously forecast. It also expects its tax rate to be 20 per cent rather than 26 per cent. All other expectations are unchanged, Intel said.

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
News
people Emma Watson addresses celebrity nude photo leak
PROMOTED VIDEO
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Sport
footballFeaturing Bart Simpson
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    SharePoint Engineer - Bishop's Stortford

    £30000 - £35000 per annum + benefits: Ashdown Group: A highly successful organ...

    Automation Test Lead (C#, Selenium, SQL, XML, Web-Services)

    £50000 - £55000 per annum + Benefits + Bonus: Harrington Starr: Automation Tes...

    SQL Technical Implementation Consultant (Java, BA, Oracle, VBA)

    £45000 - £55000 per annum + Benefits + Bonus: Harrington Starr: SQL Technical ...

    Lead C# Developer (.Net, nHibernate, MVC, SQL) Surrey

    £55000 - £60000 per annum + Benefits + Bonus: Harrington Starr: Lead C# Develo...

    Day In a Page

    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering