AMD and Intel Reach Agreement to Settle Outstanding Disputes

Strategic Insights -

Advanced Micro Devices, Inc. (AMD) and Intel Corporation have put an end to their long-standing legal disputes, agreeing to a settlement that will enable them to focus on competing in the marketplace rather than the courts. The landmark agreement, reached after four months of negotiations, addresses several key areas of contention between the two companies. As part of the deal, AMD will gain a perpetual license to the microcode in Intel's 386 and 486 microprocessors, while Intel will receive $58 million as settlement for past damages in the 486 ICE case. The agreement also includes provisions for a new patent cross-license, the licensing of Intel's Crawford 338 patent, and the use of foundries for Am486 products.

Key Takeaways:

  • AMD will have a perpetual license to the microcode in Intel's 386 and 486 microprocessors.
  • AMD agrees to not copy any other Intel microcode, including the Pentium Processor, P6 microcode, and 486 ICE microcode.
  • Intel will pay AMD approximately $18 million (including interest) awarded by the arbitrator for breach of contract.
  • The companies will drop all cases, including appeals, currently in the courts.
  • AMD will withdraw its antitrust case against Intel.
  • AMD will have the right to use foundries for Am486 products containing Intel microcode for up to 20% of its 486 production.
  • The two companies will agree not to initiate legal action against one another for any activity occurring prior to January 6, 1995.
  • The agreement includes the licensing of Intel's Crawford 338 patent, covering memory management.
  • Richard Previte, president and chief operating officer of AMD, and Craig Barrett, executive vice president and chief operating officer of Intel, were the lead negotiators of the agreement.
  • AMD is the fifth-largest U.S. manufacturer of integrated circuits, focusing on personal and networked computing and communications markets.

Statistics:

  • The settlement will cost Intel $58 million.
  • AMD will receive approximately $18 million (including interest) from Intel.
  • The agreement was reached after four months of negotiations.
  • Intel will pay AMD $18 million (including interest), and AMD will drop its antitrust case against Intel.
  • The two companies will agree not to initiate legal action against one another for any activity occurring prior to January 6, 1995.
  • AMD will have the right to use foundries for Am486 products containing Intel microcode for up to 20% of its 486 production.

Sources:

  • BUSINESS WIRE, January 11, 1995
  • Advanced Micro Devices, Inc.
  • Intel Corporation