Intel Threatens AMD's Chip-Making License

At the heart of the x86 licensing dispute is whether AMD's chip-manufacturing spin-off, GlobalFoundries, is a separate company or a subsidiary.



Intel is threatening to terminate a cross-licensing deal with Advanced Micro Devices, claiming its chief rival has breached the patent agreement by extending its rights to GlobalFoundries, AMD's newly formed joint manufacturing company.

In a March 11 filing with the Securities and Exchange Commission, AMD said Intel has threatened to terminate the 2001 agreement within 60 days if the dispute isn't settled. AMD denies it has done anything wrong.

The company's cross-license agreement covers thousands of patents related to the x86 microarchitecture that forms the foundation of microprocessors powering today's PCs. Without such an agreement in place, AMD's chip-manufacturing spin-off, GlobalFoundries, wouldn't be able to make x86 processors for AMD or anyone else, an Intel spokesman said.

"Any product AMD built without this license agreement in place could conceivably infringe" on Intel patents, the spokesman told InformationWeek. The agreement covers 12,500 Intel patents. He didn't know how many AMD patents were covered.

At the heart of the dispute is whether GlobalFoundries is a separate company versus a subsidiary of AMD. GlobalFoundries is a joint venture between AMD and Advanced Technology Investment Co., formed by the Abu Dhabi government.

As an AMD subsidiary, GlobalFoundries would have a right to Intel's patents. However, Intel maintains that AMD can't call the company a subsidiary because AMD only owns 34.2% of GlobalFoundries with ATIC controlling the rest. As a result, the new company has to cut its own deal with Intel, which has never said it wouldn't license its technology.

"If GlobalFoundries wants a license, then they should talk to us, and so should AMD," the Intel spokesman said.



In the SEC filing, AMD says that Intel is claiming that AMD violated the licensing agreement "through the creation" of GlobalFoundries. Intel denies that's the case. In addition, AMD accuses Intel of failing to follow the proper procedure for handling disputes and is therefore also in violation of the agreement. Intel also denies that allegation.

AMD wasn't immediately available for an interview, but in a statement the company said, "Intel's action is an attempt to distract the world from the global antitrust scrutiny it faces."

"Should this matter proceed to litigation, we will prove that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license," the company said.

AMD sued Intel back in 2005, accusing the latter company of anti-competitive behavior that violates antitrust laws. The suit is pending.

Intel first notified AMD of the licensing problems in October and said it's still willing to talk to its smaller rival to settle the dispute. AMD's position on future talks isn't clear. No lawsuits have been filed yet.

In the meantime, GlobalFoundries officially opened for business this month. The company has announced plans to expand manufacturing capacity at its facility in Dresden, Germany, by then end of the year, and to begin construction this year on a second fabrication plant in Saratoga County, N.Y.

The $4.3 billion GlobalFoundries employs 3,000 people worldwide and is based in Silicon Valley, Calif.


Those next-generation x86 processors from Intel and AMD are paving the way for improved virtualization. InformationWeek has published an independent analysis of this topic. Download the report here (registration required).

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