Intel Unlikely to Pose Legal Threat to AMD’s Spin-Off Plans for The Foundry Company

Article by J. F. Amprimoz (18,602 pts ) , published Dec 29, 2008

Even if Intel wanted to block the deal in court, and they haven’t said they do: is AMD going to try something this big without having thought of the x86 licensing issues before hand?

We’ve performed a (very informal) analysis of how the x86/x86-64 cross license could threaten AMD’s plans to spin off its manufacturing assets into the Foundry Company. In order to shut out AMD but still have access to their x86-64 side of the cross-license, Intel would need to Terminate for Cause (section 6.2) based on a material breach (6.2.a). Intel can also terminate the agreement if AMD undergoes a Change of Control (6.2.b.7), but it appears that terminating under that clause would cut off both sides of the license.

What we found is that the spin-off seems structured in such a way that AMD is not, as defined in the license, undergoing a change of control, and, also by definition in the license, TFC is a subsidiary of AMD. That means they can produce AMD’s chips under the x86 license without causing a “material breach.”

At least as far as we found, anyways, though (as you are tired of hearing if you’ve been reading the whole series) I am not a lawyer and many parts of both the spin-off and license documents are confidential. But would the spin-off plan have gotten past square one if AMD’s legal counsel didn’t think it would fly?

Now That Would Be Embarrassing

According to Joel Hruska of ars technica in Intel to examine AMD split for x86 licensing violations:

“It's possible—indeed, it seems likely—that AMD built this deal from the ground up with all of its restrictions in mind… With over a year (and possibly two) to consider the situation, and the terms of the license right in front of it, it's hard to believe AMD built the plan first, then belatedly went, ‘Oh, yeah—Intel.’”

Indeed, it would be hard to believe. We don’t have all the confidential information, and our highly informal approach was far from exhaustive, so it is more than possible we missed something. But for AMD to have internally missed something of this sort of significance would be a biggie.

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