Intel Lawyers Warn AMD over x86 License and Global Foundries, AMD Fires Back
written by: J. F. Amprimoz•edited by: Lamar Stonecypher•updated: 3/23/2009
Is Intel out to destroy AMD, or is the threat to pull AMD’s x86 license over the Global Foundry all-important posturing for shareholders? Then again, maybe it’s just fud flinging.
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Late last year, AMD finalized plans to spin off their manufacturing operations with help from investment from Abu Dhabi. The spinoff was then called The Foundry Company as a working title, which has now been changed to Global Foundries.
One issue that came up, courtesy of Intel spokesperson Chuck Mulloy, was that the new company might not have the right to produce x86 chips under the existing cross-license with Intel.
But it appears that Intel disagrees, having officially informed AMD that they are materially breaching the agreement. If mediation efforts fail over 60 days, Intel can pull the plug on AMD’s side of the cross license, without affecting their own access to the technologies they get from AMD in the agreement.
In that sense, Global is a company in which AMD is invested, not a subsidiary, and doesn’t have access to the x86 license. The problem is, the public sections of the license discuss contributed assets and control, not financial ownership, as the defining points of a subsidiary. Our informal analysis found that Global Foundries is within the definition of a subsidiary.
Of course, that’s relying only on public bits of the agreement. The second avenue of this dispute involves Intel’s statement that there is something in the confidential parts of the license that backs up their concerns. This has opened up yet another conflict for AMD and Intel to hammer out: making the x86 license public.
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AMD to Intel: I’ll Show You Mine If You Show Me Yours?
Intel was keen to share their confidential concern with the world, or at least keen to make that impression. They claimed that they wanted to make the license public, but AMD refused. AMD said they’re up for making the license public, as long as Intel agrees to make something else public: the confidential evidence in the two companies’ anti-trust battle, which started in 2005 and might reach trial next year.
That’s pretty out of left field. While we would all love to know what’s going on in the anti-trust battle, confusing the issues means we’re unlikely to get more details on the Global Foundries question. Then again, AMD feels the issues aren’t separate to begin with, which we examine on the next page.
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AMD has responded to Intel's threat to pull the x86 license from the Global Foundries spinoff with an accusation of their own. According to AMD, Intel's claims were fabricated to damage AMD's relationships with customers. And AMD won't agree to make said license public, unless Intel agrees to make public evidence in the anti-trust suit AMD brought against them in 2005, which still hasn't gone to trial.
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Is Intel Fabricating More Than Chips?
AMD has come out firing, with an SEC filing and loads of comments claiming that Intel’s concerns are an attempt to mess with AMD and possibly to divert attention from the antitrust suit. AMD’s Director of Investor Relations, Ruth Cotter, wrote: “Should this matter proceed to litigation, we will prove not only that Intel is wrong, but also that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license."
So AMD isn’t just denying Intel’s accusation, they are accusing Intel of making the accusation for dishonest reasons. That would bode poorly for Intel on the anti-trust front, and, AMD claims, is itself a breach of the cross license. From the SEC filing:
“In addition, the Company [AMD] has informed Intel that the Company maintains that Intel’s purported attempt to terminate the Company’s rights and licenses under the Cross License itself constitutes a material breach of the Cross License by Intel which gives the Company the right to terminate Intel’s rights and licenses under the Cross License Agreement while retaining the Company’s rights and licenses under the Cross License Agreement."
So things appear to be heating up, and those mediators certainly have an interesting 60 days on their hands. If Intel and AMD stick to their guns, what happens after 60 days?
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How Big a Deal is This?
Assuming Intel and AMD are still at odds when the mediation period is over, Intel sends AMD a letter that says they can’t make x86 chips anymore. And AMD keeps making them. Intel will go to court to try and stop AMD, which will likely take years. The license is up for renegotiation in 2011 anyway.
Plus, the question remains: is Intel really that hot on killing off AMD and invoking the monopoly legislation of dozens of countries? John Dvorak points out that if there is a lawsuit to be had, and Intel doesn’t give it a shot, they leave themselves open to being sued by their own shareholders for not doing their jobs and defending investors’ interests.
It might just be an attempt to generate leverage for Intel in their negotiation of the new cross-license. It could even give them a bargaining chip if the anti-trust trial finally gets underway next year, and Intel decides or is forced to settle.
If Intel is just covering all of its bases to keep shareholders, or just tossing some fud AMD’s way, this will likely be wrapped up by the end of the mediation period. If we haven’t heard the end of it by then, we will be hearing about it for years.