Intel, AMD Settle Legal Disputes For $1.25 Billion

Intel and AMD made a joint statement regarding the settlement. "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development," the statement read.

The agreement has a number of effects, the biggest of which will be Intel paying AMD $1.25 billion. In addition, AMD and Intel will obtain patent rights from a new five-year cross-license agreement. Intel and AMD also will give up any claims of breach from the previous license agreement, and Intel has agreed to abide by a set of business practice provisions, which have yet to be detailed.

In return, AMD agreed to drop all pending litigation, including the antitrust lawsuit AMD filed in 2005, which is scheduled to go to a Delaware court in March. There were also two pending cases involving the companies in Japan. AMD also agreed to withdraw all of its regulatory complaints worldwide. The agreement will be made public in filings with the Securities and Exchange Commission.

The announcement comes one day after AMD's Financial Analyst Day, where CEO Dirk Meyer told analysts and media members that his company's claims against Intel "had been ratified" by regulators around the world. Meyer cited the European Union decision to fine Intel $1.45 billion earlier this year for anticompetitive practices, as well as the recent antitrust suit filed against Intel by New York State Attorney General Andrew Cuomo.

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The settlement between AMD and Intel looks to benefit both companies. AMD received cash for its troubles, and Intel has cured a major headache and will now be able to concentrate on more pressing legal matters, including the New York State antitrust suit and its appeal of the EU's antitrust ruling.