Intel settles with AMD. What's next?

The chipmaker still faces the New York attorney general, foreign trade regulators, and about 80 consumer class-action lawsuits.

By Roger Parloff, senior editor

NEW YORK (Fortune) -- In yesterday's settlement of AMD's worldwide antitrust claims against Intel, Intel agreed to pay $1.25 billion to AMD. In addition, the two companies renewed a longstanding patent cross-licensing deal, but with Intel agreeing to delete language from it that -- as Intel interpreted it -- was restricting AMD's ability to outsource fabrication of its semiconductors to nonsubsidiaries.

The new agreement will, thus, free AMD (AMD, Fortune 500) to realize its longstanding strategy of going "fab-less," i.e., contracting out all of its semiconductor production, rather than relying on its own fabrication plants, or fabs. Under the deal, Intel (INTC, Fortune 500) also agreed to refrain from a variety of exclusionary conduct that Intel has always denied -- and still denies -- ever having engaged in.

The settlement will still leave Intel facing about 80 class-action consumer antitrust suits -- each seeking treble damages -- which have been consolidated in the same federal court in Delaware where the AMD case had been filed.

Though AMD also agreed to drop complaints it filed against Intel with regulators around the world, the gesture will have no binding impact on what those regulators will do.

Thus, Intel will certainly have to continue to fight the Cuomo complaint, also filed in the Delaware federal court, and may yet face a set of fresh charges now being weighed by the Federal Trade Commission. (The FTC is believed to be focusing on Intel's conduct in the burgeoning new market for netbook computers, including controversies that have already led to litigation between Intel and chipset designer NVIDIA (NVDA).)

In addition, Intel will continue to pursue appeals of final decisions rendered against it by the European Commission in May and by the Korea Fair Trade Commission in June 2008.

The EC hit Intel with its largest fine in history -- $1.46 billion -- after finding, among other things, that it made illegal payments to Dell (DELL, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), NEC, Acer, and Lenovo in exchange for their agreement to limit or bar their use of AMD chips in some or all lines of computers. It also found that, for more than a decade, Intel had paid the largest computer retailing chain in Europe, Media Saturn Holdings, to bar it from selling any AMD-powered computers.

Similarly, the Korean FTC found that Intel had paid Korean computer makers Samsung and Sambo to cap their usage of AMD chips.

Earlier, in March 2005, the Japan Fair Trade Commission found Intel had done the same thing with five unidentified Japanese manufacturers, believed to be Sony (SNE), Toshiba, NEC, Fujitsu, and Hitachi. Intel settled the Japanese charges. To top of page

More Galleries