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Intel to pay chip rival AMD $1.25B in Antitrust Settlement

Nov. 12 – Intel will pay Advanced Micro Devices, its chief rival in the computer microprocessor market, $1.25 billion to settle all antitrust and patent suits, according to a joint statement issued by the companies.

Intel, based in Santa Clara, also has agreed to abide by a set of business practice provisions, according to the statement. In return, Sunnyvale-based AMD will drop all pending litigation, including cases in U.S. federal court and two cases pending in Japan, according to the release.

AMD also will withdraw all of its regulatory complaints worldwide. The agreement will be made public in filings with the U.S. Securities and Exchange Commission.

In a joint statement, Intel and AMD commented, “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.”

Under terms of the agreement, AMD and Intel obtain patent rights for each other’s technology from a new five-year cross license agreement.

Just before 8 a.m. PST, AMD shares had soared $1.16, or 22 percent, to $6.48. Intel shares were up 7 cents to $19.91.

AMD has been contending to regulators for five years that Intel has broken antitrust laws to limit AMD’s market share. Despite the settlement, Intel still is facing antitrust cases in the U.S. and the European Union.

“The job is not done,” said David Balto, a

Washington antitrust lawyer and former Federal Trade Commission policy director. “The Intel-AMD case is a private dispute. Although the settlement may eliminate some barriers, FTC action is necessary to assure long-term relief in this market, that competition is fully restored, and that consumers have the benefit of an open market.”

In May, the EU fined Intel a record $1.45 billion, and last year, South Korea’s Fair Trade Commission fined Intel $18.6 million. Intel is appealing both rulings.

EU spokesman Jonathan Todd told The Associated Press 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.

In 2005, Japan’s Fair Trade Commission found that Intel violated antitrust rules in that country. Intel accepted that ruling without admitting wrongdoing.

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