Intel and AMD Detail Their Settlement

It's a good day for AMD, and probably a good day for Intel as well. As we reported earlier, Intel and AMD have settled their disputes, which centered around antitrust and licensing issues. The companies detailed the settlement in a 7AM PST press conference.

The agreement, announced Thursday, covers both antitrust litigation and patent cross-license disputes, which have been ongoing since 2004. It follows AMD Financial Analyst Day on Wednesday, at which AMD CEO Dirk Meyer said his company's claims about Intel's alleged illegal behavior have been "ratified" globally.

It also follows, by slightly more than a week, the latest filing against Intel by a government body. Last Wednesday, NY Attorney General Andrew Cuomo filed an antitrust suit against Intel.

While the agreement gives AMD a $1.25 billion boost to its bottom line, it does more than that. Possibly as important as the cash influx is a new five-year cross-license agreement between the two companies. AMD will additionally give up any claims of breach of contract from the prior license agreement.

Finally, and probably most important to AMD, Intel has agreed to "abide by a set of business practice provisions." This would mean, if carried through to fruition, no more "rebates" to OEMs to encourage them to buy Intel, rather than AMD.

In a nutshell, AMD said that Intel will refrain from offering inducements to companies in exchange for their agreement to exclusively buy Intel CPUs; limit their purchases of AMD CPUs; limit their promotion or distribution of AMD products, limit their participation in AMD launches, advertising, or other such promotional activity; or limit their development of AMD-based products. Additionally, Intel will refrain from threatening retaliation against anyone not agreeing to the above.

It should be noted, however, that Intel's lawyers will still be busy. The Intel - AMD agreement does nothing to stop governments from litigating against Intel. AMD has agreed to drop all of its pending litigation.

For example, there is the aforementioned NY case. Additionally, after AMD filed its lawsuit in 2004, EU regulators brought their own case against Intel that led to a $1.5 billion fine. Intel is now appealing.

Intel stock is currently unchanged after the news. AMD stock is up over 20% to $6.44.