Money Matters, Simplified.
Intel settles AMD suit, pays $1.25bn
by Jaspreet Kaur - November 13, 2009 - comments
Even though AMD and Intel have reached a settlement, the U.S. and European watchdogs will continue with the investigations into the fraudulent charges against Intel
San Francisco, November 13 -- The world’s two largest chip-makers, Intel Corp. (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD), have finally decided to settle their business differences with Intel agreeing to pay $1.25 billion to AMD.
So far this has been one of the most fierce and costliest legal battles in the computer industry.
AMD had accused Intel of using unfair means to maintain top position in the highly competitive chip industry. It had complained that Intel offered huge discounts and bribes to computer manufacturers so that they use only the chips made by Intel and not AMD.
New York Attorney General Andrew M. Cuomo had also levied similar charges against Intel last week.
Watchdogs’ investigations to continue despite Intel-AMD settlement
However, Intel’s decision to pay money to AMD for dropping multiple charges of anti-trust violations against it would not put a halt on the investigations being carried out by the U.S. and European regulators.
The regulators believe that the malpractices put into use by Intel have hurt the competitors as well as the end consumer.
Federal Trade Commission (FTC) Chairman Jon Leibowitz was quoted as saying, “Certainly we plan to review the settlement between Intel and AMD in their private litigation.”
E.U. spokesman Jonathan Todd added that even though both the companies had reached an agreement, the government will still check if Intel has broken any European antitrust law.
The settlement details
In lieu of Intel’s $1.25 billion payment, AMD has consented to let go of the antitrust and patent licensing lawsuits. This includes one in the U.S. District Court of Delaware and two cases that are pending in Japan.
Furthermore, AMD will also take back its complaints from regulatory agencies, including the FTC.
A statement issued by the two companies said, “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.”
With this settlement, Intel and AMD have also given a nod to a new five-year, cross-license agreement. Both the companies will put a stop on any claims of breach filed against each other from the earlier agreement.
Intel has also consented that it will comply with a fixed set of business practice terms and rules.
AMD and Intel: stiff competitors
AMD that was started four decades ago has made a name for itself in the chip-manufacturing industry. However, it has always been at price competition with Intel.
AMD’s products are not considered at par in quality with those made by Intel, and this has often led to severe price conflicts between the two companies. But the new deal might change the dynamics between both the companies.
Although the results will not be seen immediately, Dirk Meyer, the chief executive of AMD said that the settlement opened the door to a “transformation in the way our industry operates”.