Intel has accused rival Advanced Micro Devices of breaching a 2001 cross-licensing agreement with the $4.3 billion semiconductor spin-off of Globalfoundries. AMD denies the allegations.
Threatening to terminate AMD's rights in 60 days if the company doesn't correct the breach, Intel said it "believes that Globalfoundries is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement."
AMD responded through a filing with the U.S. Securities and Exchange Commission. AMD denied any wrongdoing and argued that Intel has no right to terminate its rights and licenses covered by the cross-licensing agreement.
"Intellectual property is a cornerstone of Intel's technology leadership, and for more than 30 years the company has believed in the strategic importance of licensing intellectual property in exchange for fair value," said Bruce Sewell, Intel's general counsel.
Keeping it Confidential
At issue is a confidentiality agreement. Intel said the joint venture between AMD and Advanced Technology Investment Company breaches a confidential section of the Intel-AMD agreement. The AMD plants that manufacture the chips based on Intel's intellectual property are now part of Globalfoundries.
"AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," Sewell said. He said the company is "willing to find a resolution" and indicated Intel would seek resolution through mediation rather than a long court battle.
However, AMD said Intel had already breached the agreement by its "purported attempt to terminate [AMD's] rights and licenses under the cross license." Intel's threat, AMD said, gives AMD the right to cancel the agreement that expires in 2010.
Is Intel Threatened?
Does Intel's threat mean it feels threatened by AMD and its new joint venture? According to Ron Lineback, a senior market-research analyst at IC Insights, anything that helps AMD cut costs and become more viable and competitive is a threat to Intel.
"Since the late 80s, AMD has been a thorn in the side of Intel," Lineback said. "In 2005, AMD was outperforming Intel. Intel's multi-core chips put it back in the driver's seat for performance. AMD has had more struggle to keep up with Intel since then. Over the past year, there were a lot of question marks as to whether AMD was going to be able to remain a viable competitor to Intel."
If the Globalfoundries spin-off is successful, it could theoretically make AMD more competitive with Intel. Intel doesn't want to see that happen, Lineback said, and is trying to stop the charge rather than prolonging the battle between the longtime rivals. Intel may also be trying to keep its intellectual property out of foundries for fear of theft and the resultant clones.
"These two companies have been fighting over legal issues for more than a decade," Lineback said. "AMD has accused Intel of trying to monopolize the industry. There's antitrust suits that are still pending both here and in Europe. This is just one more fight. Eventually, I guess we're coming down to where lawyers are going to win the war rather than technology."