The legal saga comes finally to an end. AMD and Intel have just jointly announced that the outstanding business practice dispute between the two companies (where AMD has filed lawsuits against Intel for illegal business practices) is settled.
The agreement between the two companies includes:
*a five year cross licensing agreement for the x86 architecture (which permits AMD to use multiple foundries)
*ground rules to define a path to an open and free market for microprocessors (read: to avoid illegal business practices that AMD has sued Intel for, and of which Intel has been convicted for in Korea, Japan and the European Union, with further on-going litigation in the US pending)
*Globalfoundries, the joint venture between AMD and ATIC of the UAE, can operate independently of AMD, and without being a subsidary of AMD
*Intel will pay AMD USD1.25 billion
*AMD will withdraw all pending litigations and also all complaints worldwide against Intel
Now, this announcement can be traced by over the years of court filings around the world. The gist of it is that AMD has alleged that due to illegal business practices by Intel it has been denied access to the PC channels, by the use of specific rebate and marketing schemes that were designed deter PC OEMs from adopting AMD designs. The most recent law suit was made by the New York Attorney General, where the NYAG makes it rather clear how (in its 80+ page court filing) Intel, in the view of the NYAG's office, has used illegal business practices that has led to less choice, less innovation and higher prices for the customers in New York.
We are not legal experts and can only speak as laymen on this legal development, but given the convictions and fines in Korea, Japan, and the European Union, and with the filings made by the NYAG and with investigations made by the FTC of the US, one could speculate that AMD would have a strong case in its own private law suit against Intel. Trial date was set for March 2010 (this is now of course withdrawn).
One might wonder why AMD settled out of courts, however, AMD has a lot to lose by sitting it out in the courts. Intel would probably be able to file multiple appeals on a conviction, which could mean that a private law suit would drag on for years before a final conviction. In the meanwhile AMD has a short term problem: the roadmap for 2010 is bleak while it waits for the arrival of the Fusion products set for 2011. While AMD waits for shipments of Bobcat (solution for low power devices) and Bulldozer (for performance devices) it will have to sit out 2010 with a product roadmap that is likely to be weak compared to Intel's products.
However, we do wonder how these 'ground rules' will be honoured and kept, or for that matter monitored. Are there means in which AMD or Intel can speed up and private law suit filings if the other company breaches these agreed upon business practices? How will these rules be communicated to the OEMs and customers of AMD and Intel? Part of the problem, according to the filings made by NYAG, was that the PC OEMs, such as Dell, became so dependent on Intel funds to meet profitability targets (and in even some quarters they needed the funds to remain profitable) that it was not in the interest of the OEMs to report the practice and it was also in their interest to keep AMD in the dark.
At Premonvision we hope that this settlement will bring clarity to the processor market, and that innovation will increase, while both suppliers will be able to compete on fair and equal terms. For full disclosure: neither company is a client of Premonvision.
