Intel to Pay AMD $1.25 Billion in Lawsuit Settlement

Posted on November 12, 2009

Intel has agreed to pay AMD $1.25 million to settle all the outstanding legal claims between the two companies. Intel and AMD together make nearly all of the chips used to run computers and servers. Intel controls around 80% of the market and AMD controls the rest. AMD sued Intel in a private lawsuit for antitrust violations and anticompetitive actions. The Justice Department has also been looking at Intel for possible antitrust violations. Under this settlement, Intel pays AMD the $1.25 billion (which is really going to help AMD's cash flow) and has agreed to abide by a set of rules for how it conducts business. The companies also signed a renewed cross-licensing deal.
Legal and regulatory battles have increasingly been turning against Intel. Roger Kay, president of Endpoint Technologies Associates, which tracks the field, said that by settling, Intel may have alleviated some of the pressure regarding the cases brought by others.

"It was only going to get more expensive the farther down the litigation road they went, and this takes a lot of wind out of the sails of the other suits," Mr. Kay said. "Intel may have just reduced its legal tab by a number of billions of dollars."

The settlement was sorely needed for AMD, which has struggled with mounting losses and high debt levels related to its acqusition of graphics-chip maker ATI Technologies. With the lawsuit and other legal disputes now behind it, the company removes a serious investor concern, said Wedbush Morgan analyst Patrick Wang.

"AMD's liquidity issues are going to be taken away," Mr. Wang said. "This is something that is going to take away a major overhang for investors." For its part, AMD said "the game has changed" in the chip business because of its strategies
It is a very happy day for AMD, that's for sure. As for Intel, it will have to change the way it does business and write some really big checks to shut down all its antitrust problems. This settlement will go a long way towards doing that.