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Why the Biggest Antitrust Case Ever May Never Get to Court

Seems only way AMD will get to keep on making x86 chips is to consign antitrust suit

Wanna bet that Intel has found a way to get AMD to drop its cherished antitrust suit against the semiconductor giant - and that AMD handed Intel the means to blow it away?

It all revolves around AMD's so-called asset light strategy and the fact that circumstances have forced it to spin out its manufacturing plants into a "subsidiary," otherwise know as the Foundry Company, that will be 62%-owned by the oil-rich Persian Gulf sheikdom of Abu Dhabi.

AMD has taken this course to survive but the spin-off raises issues with its age-old x86 license from Intel, which, as it happens, comes up for renewal next year.

The x86 IP covered by the license is Intel's crown jewels so Intel is understandably touchy about it.

The week before last, Intel sent AMD a letter asking for a sit-down to clear up some questions it has about the so-called Foundry Company.

Simply by sending the letter, Intel, under its contract with AMD, initiated formal dispute resolution.

Bottom line, that means that the only way AMD gets to keep its right to go on making x86 chips is to consign its precious antitrust suit, which has already involved trading more pieces of paper than any other dispute in the history of man, to the ash can - along with its dream of a fat juicy award that squares its books.

When the companies sit down, Intel is gonna wanna know from AMD how it is that AMD can unilaterally consign its x86 rights to a third party and what happens to Intel's IP if and when AMD's position in the Foundry Company - already reduced from the originally envisioned 44.4% and the deal hasn't even closed yet - drops yet again.

See, there's a 20% cap on non-AMD produced wafers in the license, suggesting that AMD would have to own at least 51% of the Foundry.

AMD's simply calling the Foundry Company a subsidiary isn't going to cut it for Intel, which wants AMD to make the redacted parts of the cross-license deal public.

Intel is unlikely to get much of an argument about AMD's lawsuit from Abu Dhabi. The emir could give a tinker's dam about it. There's nothing in it for him; he's just concerned about the validity of the x86 license, which he hopes to leverage into a broader semiconductor-making enterprise. Which is probably why, according to its Foundry deal with AMD, Abu Dhabi can veto any settlement discussions with Intel.

Nobody can do much about the AMD-initiated antitrust case that the European Commission has brought against Intel; that has a life of its own now, but it might be a nice touch if AMD dropped its complaint.

When asked about all this, Intel spokesman Chuck Mulloy said, "Intel does not comment on speculation." Not to worry, there are just some times it's best to read the writing on the wall.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments
Kan 01/30/09 12:39:00 PM EST

I cannot agree with the logic that the Intel's x86 IP will force AMD into submission. Whereas Intel owns the X86 IP, the x64 IP belongs to AMD. The industry is right at the crosspoint turning 64 bit. Even if Intel want to dump AMD by giving up the right to use x64 instructions, the rest of the industry will not agree and it is silly for Intel to alienate the whole industry. It is a lose-lose situation. Should this happen, it will only force the Government to intervene, probably in favor of AMD, and Intel may end up as the lone loser.