SAN FRANCISCO (Reuters) - Chip makers Intel and Advanced Micro Devices said Thursday they have settled all outstanding legal disputes, including antitrust litigation and patent licensing issues. Intel said it will pay AMD $1.25 billion as part of the settlement, sending shares of AMD up nearly 30 percent. The two companies also sealed a five-year cross license deal and said they would give up any claims of breach from their previous license agreement.
AMD said it would drop all pending litigation including a case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide.
Competition authorities in Asia, Europe and the United States have taken action against Intel in recent years because of persistent complaints by AMD about the behavior of Intel, which makes 80 percent of the central processing units at the heart of personal computers.
“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,” AMD and Intel said in a joint statement.
Intel can well afford the $1.25 billion payment: its Q3 net income alone was $1.9 billion. Nor is the chip maker unfamiliar with making big payouts: In May the European Union fined the company $1.45 billion for unfairly undermining AMD with secret payments to computer makers to use its chips.
Of course, this is far from settles of all of Intel’s problems regarding alleged anti-competitive behavior. New York Attorney General Andrew Cuomo filed a federal anti-trust suit against Intel last Wednesday, alleging the chipmaker cornered the market by illegally punishing and bribing computer manufacturers.
As a result of the settlement with AMD, Intel adjusted its fourth-quarter outlook. The chip maker raised its spending forecast to $4.2 billion from $2.9 billion, and said its effective tax rate would be about 20 percent, down from 26 percent. Other expectations are unchanged, Intel said.
Shares of AMD jumped 23 percent to $6.55 in early trading on the New York Stock Exchange. Intel shares were halted.
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