Intel Could Shut Down AMD's CPU Production Completely in Two Months

[CvP]

Intel says GlobalFoundries deal breaches AMD cross-licensing agreement

Intel Corporation has sent notice to its chief competitor Advanced Micro Devices that it believes AMD has breached a patent cross-licensing agreement that the two reached in 2001. The agreement covered royalty payments by AMD in regards to aspects of the x86 instruction set used in CPUs, as well as foundry and production rights.



AMD recently spun off its fabs in a multi-billion dollar deal involving Advanced Technology Investment Company (ATIC) and Mubadala Development, both solely owned by the Emirate of Abu Dhabi. The deal funnelled badly needed cash and debt relief into AMD, which has been struggling for several years to compete against Intel's CPUs. It also led to the creation of GlobalFoundries, an integrated circuit foundry which will compete against the likes of TSMC and Chartered Semiconductor for business. AMD would continue to be GlobalFoundries' primary customer.


However, Intel believes that GlobalFoundries is not a subsidiary under the terms of the agreement, and is therefore not licensed to produce CPUs that use key technologies licensed under the 2001 patent cross-license agreement.


Intel also said that the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement, and it has asked AMD to make the relevant portion of the agreement public, but so far AMD has declined to do so. AMD's breach could result in the loss of licenses and rights granted to AMD by Intel under the agreement.


If GlobalFoundries is not recognized as a subsidary of AMD, it will have to negotiate with Intel to secure patents that would allow it to continue to produce AMD's CPUs at its fabs in Dresden. Intel has the option of securing a court injunction to halt production until the dispute is settled. Negotiation of a patent licensing agreement could take months, if not years.


"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. However AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," said Bruce Sewell, Senior Vice President and General Counsel for Intel.


"We have attempted to address our concerns with AMD without success since October. We are willing to find a resolution but at the same time we have an obligation to our stockholders to protect the billions of dollars we've invested in intellectual property".


In a filling with the Securities and Exchange Commission, AMD stated Intel "purports to terminate the Company's rights and licenses under the Cross License in 60 days if the alleged breach has not been corrected".


Intel claims that in response to the material breach notification it sent out, AMD claimed Intel breached the agreement by notifying AMD of its breach.


AMD defended itself, with Harry Wolin, AMD's Senior Vice President and General Counsel, stating that Intel's unilateral "purported attempt to terminate the Company’s rights and licenses under the Cross License itself constitutes a material breach of the Cross License by Intel".


Under the terms of the license agreement, the notification to AMD means the two parties will attempt to resolve the dispute through third party mediation.






a user comment on daily tech:

The truth behind is Intel is trying to make sure no company can gain by reselling its IP. Why does ATIC want to provide tens of billions dollars to AMD just to get those inferior AMD fabs in the first place? It's pretty simple, it wants to access all those IPs that licensed to AMD automatically. AMD is reselling the right to IPs that it doesn't own to gain fast cash. Intel is defending it's own properties and making sure no other will follow AMD. I don't see there is anything wrong with that.

More from INQ:

PLEASE SIT DOWN if you are not already, but the long long long telegraphed patent license spat between Intel and AMD over Global Foundries is edging closer to a hot war. Intel sent AMD a letter saying it is breaching the agreement, and AMD is shooting back.
Word of this tiff first leaked out when AMD filed an 8-K form this morning saying that Intel thinks the Global Foundries deal breaches the 2001 patent cross-license agreement between the two companies. It gives AMD 60 days to rectify this breach or its rights under the agreement would be terminated.
This does not mean that Intel's rights would be terminated, however. For that, Intel would need to breach its side of the agreement. That is why AMD sent Intel a 'please get stuffed yourself' letter basically accusing Intel of interfering with AMD's business. This gives Intel 60 days to rectify that problem or its rights get terminated.
According to the agreement, the two sides had to meet, and that was done. The next step is to send letters, which as you can guess, is now done. Mediation follows, and if the two sides don't see eye to eye, then the licenses terminate... sort of.
From there, it will get ugly, and end up with lawyers in court. AMD says that it is in full compliance with the agreement, and Intel obviously disagrees. Given the glacial speed of the courts, this looks to be settled long after the sun dies a heat death somewhere around the year 5 billion.
Ironically, that is after the AMD antitrust trial is set to go forward in early 2010. The next 12 months or so look to be very lucrative for AMD and Intel legal staff, outside counsel, and local pizza joints that deliver late at night.
One interesting side note is what the breaches are. Intel says there are two breaches, one is in the definition of 'subsidiary'. Basically, Intel alleges that AMD does not have enough ownership for Global Foundries to be a real subsidiary, and that means AMD is fabbing too many wafers 'externally'.
That particular issue should be pretty cut and dried, there are legal definitions of such terms. It would shock us greatly if AMD didn't very carefully tap dance around those definitions when it did the Global Foundries deal. We don't see this as going very far, but it makes good headlines.
The second issue is a bit more touchy. The agreement which can be found here has a bunch of things redacted. Intel alleges that AMD is in violation of one of the redacted parts, but neither side can comment on what that bit is, or why AMD is not living up to it. Supposedly. Lets hear it for censorship, three cheers, one, ****, three!
Intel is saying that if AMD says it is in the clear, why not make the document public? On the phone this morning, AMD sort of agreed to do so, provided that Intel makes public the antitrust documents.
When asked about this, Intel didn't seem to mind as long as AMD opened up its side as well. Since there isn't a big company out there that doesn't have snotloads of embarrassing emails stuck on compliance-mandated WORM media, this should be fun to watch.
In the end, we are at step two of a four or five-step process, and that doesn't count appeals, counter-potshots, and general legal manoeuvering. This is unlikely to be settled for years, and will drag on and on and on, with only mild flashes of interest until then.
For now, we have legal posturing, position staking, and general FUDding of the press and markets. With any luck, both sides will agree to open the agreement, and then open the antitrust documents, then things will be fun.
How about it guys? µ

[GiDDY_SOUL]

I think Intel will Win! Cuz AMD doesnt have a strong point to defend with.

AMD Had to sell off its fab .. its still amazing how they were in business all these years... AMD CPU market share never went higher than ~ 27% Despite having Athlon X2 a gr8 product few years Back. I wonder why people bought Pentium D's in BD & not Athlon X2's. Even trying to explain people didn't help. The name Intel just meant Original for People in BD strange. And there are those Intel Fan boys.. Never buy anything except Intel. I even saw some1 Asking if there are intel Keyboard, Mouse, CD-ROM, etc.. cuz he wanted his PC to b all intel!

Pray that VIA comes up with sth.. If not.. CPU prices are going to rise after 2 months.

[Mazhar]

intel simply wont win this one, with all the discussion about their anti-competitive policies, and the fact that this would cause a monopoly, they simply woiuldnt let them win

this discussion is being had all around the web, and everyone seem to go with what i mentioned

[GiDDY_SOUL]

Here are some very interesting User comments from DailyTech.

Hang on.. so Intel owns the right of x86. But AMD owns the rights for 64-bit CPU's. So that means...
If both pulls out.... AMD won't make CPU's other than True 64-bit CPU's and Intel will return back to the Pentium 4.
So in reality... AMD wins, consumers and Intel loses big time.

By omnicronx on 3/16/2009 2:17:02 PM , Rating: 5
Couldn't you have just summed up your entire post by saying.

Intel owns the x86 instruction set.

Amd owns the x86-64 instruction superset.

X64 is a superset of the x86 instruction set..

But.. Intel does without a doubt license x86-64 from AMD, so the OP is in the right, although he came to his conclusions incorrectly.

[Pyro.Dynamics-]

Intel definitely has the upperhand!

[CvP]

intel simply wont win this one, with all the discussion about their anti-competitive policies, and the fact that this would cause a monopoly, they simply woiuldnt let them win

this discussion is being had all around the web, and everyone seem to go with what i mentioned

The situation is really touchy atm. Intel can win, IMO. but i doubt that's what they want because
that'd create a monopoly.

on the other hand, if Intel just let AMD continue, they ARE letting their IPs leak-out.
as posted before:

Why does ATIC want to provide tens of billions dollars to AMD just to get those inferior AMD fabs in the first place? It's pretty simple, it wants to access all those IPs that licensed to AMD automatically. AMD is reselling the right to IPs that it doesn't own to gain fast cash. Intel is defending it's own properties and making sure no other will follow AMD. I don't see there is anything wrong with that.

afaik, according to the rules of the agreement, AMD has no right to transfer or let others do their fabbing.

Hang on.. so Intel owns the right of x86. But AMD owns the rights for 64-bit CPU's. So that means...
If both pulls out.... AMD won't make CPU's other than True 64-bit CPU's and Intel will return back to the Pentium 4.
So in reality... AMD wins, consumers and Intel loses big time.

this user is a dumb.

x86 is more valuable than x86-64. it is a fact that x86-64 without x86 is not possible (let me know if im wrong) but x86 without x86-64 is very much possible.

and Intel always had it's own 64bit implementation (Itaniums).

so for arguments sake, lets just assume they both pulls out.

then AMD will be left with ONLY their 64bit things which is not supported by the general software market.

Intel will be left with x86 which can perfectly run almost ALL the softwares (albeit in 32bit mode).
and Intel also has their own 64bit AND intel is ruling the processor market by a significant
margin.

so the loser is consumer. biggest loser is AMD. and Intel...short time winner..long time..Anti-trust!!

the most funny thing is that..

Intel believes that Globalfoundries, manufacturing joint venture between AMD and Advanced Technology Investment Company, is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement. Intel also said the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement. Intel has asked AMD to make the relevant portion of the agreement public, but so far AMD has declined to do so

In response to the notification AMD claimed Intel breached the agreement by notifying AMD of its breach.

[Mazhar]

Look at this post, from the perspective of an analyst from xtremesystems:

"AMD believes they can legally continue to produce x86 chips even if the license agreement ends. They just won't have legal access to future x86 related tech that Intel may come up with. That also means that Intel would still be allowed to produce x64 compatible processors, assuming I am understanding things correctly.

Intel is trying as hard as possible to kill of GlobalFoundries by the looks. If they succeed at that, then AMD will be high and dry with no way to produce their processors. I can also imagine Intel being quite concerned that a high tech FAB will be open for business to produce GPU's for desktop, mobile, ultra mobile etc. which are markets Intel is keen to get more involved with. Intel is "x86 everywhere and in everything" driven, as long as they are supplying the hardware. GlobalFoundries potentially gives many companies a way to FAB their non-x86 creations using a leading edge FAB, something that does not exist currently.

The more the evidence comes out, the more it is becoming clear what Intel's objectives are. They don't care about using procedure, and they don't care about the possibility of losing litigation. If it gets to the point where Intel thinks they are going to lose, they will just withdraw the litigation. It still accomplished what they wanted, to seed FUD into the market place, and also to distract from the ongoing anti-trust fiasco that is dogging Intel"

x86-64 requires x86, youre correct. But intel cannot stop AMD from using x86, it simply wont happen. period. what can happen is intel not giving their instruction sets freely to AMD (ie SSE)...now thats something we hve to wait and watch

[GiDDY_SOUL]

Ever since AMD announced its plan to split itself into two separate companies, there have been legal questions surrounding the move. AMD's x86 cross-licensing agreement with Intel has always required that Sunnyvale maintain a certain corporate structure in order to continue to manufacture x86-compatible microprocessors. When it unveiled its plans to spin off The Foundry Company (now Globalfoundries), AMD confidently maintained that its plan avoided any licensing entanglements or issues Intel might seek to raise.

AMD has filed a form 8-K with the SEC, advising the agency of a cross-licensing dispute between itself and Intel. In discussions with Ars, however, AMD has also insisted that neither it nor Globalfoundries actually requires the cross-licensing agreement in order to design or manufacture x86-compatible microprocessors. That's a surprising claim that runs against the general understanding of what the AMD/Intel cross-licensing agreement allows or contains. Has Intel's ownership/stranglehold on the right to manufacture x86 processors been broadly misconstrued for years?

The official record

In its 8-K filing, AMD states that it has received Intel's allegation of a material breach; in speaking with AMD's Senior Vice President of Counsel, Harry Wolin, Ars learned that Intel is asserting that Globalfoundries fails to qualify as a subsidiary of AMD based on a redacted portion of the cross-license agreement. AMD notes that it has begun the "escalating procedure for resolving disputes."

AMD does not believe it has breached the cross-licensing agreement, and the company considers Intel's allegations of a breach to be in bad faith. If Intel's filing does turn out to be in bad faith, then AMD claims that this gives them "the right to terminate Intel's rights and licenses...while retaining the Company's [AMD's] rights and licenses under the Cross License Agreement."

It's standard operating procedure in any patent infringement lawsuit to claim that your opponent's patents are invalid/inapplicable, but the x86 agreement contains a bit of victori spolia. In the event a material breach is upheld, the breaching party loses all rights to the nonbreaching party's patents but the inverse is not true. AMD's official response, as delivered by AMD PR spokesperson Michael Silverman, claims that Intel's actions are nothing more than a desperate attempt by the larger company to redirect attention from its own actions. "Intel's action is an attempt to distract the world from the global antitrust scrutiny it faces," Silverman said. "Should this matter proceed to litigation, we will prove that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license."

Intel's own official statement is fairly terse, but confirms that the CPU giant has notified AMD of its belief that the latter has breached the x86 cross-licensing agreement, and that Globalfoundries is not a subsidiary as defined within the agreement. The Intel statement also alleges that "the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement." Intel goes on to state that it has requested that AMD make the relevant redacted portion of the agreement public (presumably that portion dealing with ATIC) and that AMD has thus far declined to do so.
"AMD cannot unilaterally extend Intel’s licensing rights to a third party without Intel’s consent,” said Bruce Sewell, senior vice president and general counsel for Intel. "We have attempted to address our concerns with AMD without success since October. We are willing to find a resolution but at the same time we have an obligation to our stockholders to protect the billions of dollars we’ve invested in intellectual property."

We put the question of why AMD has kept its agreement with ATIC confidential to Silverman. "AMD would be happy to make the entire agreement public if Intel drops its insistence on secrecy concerning its exclusionary business practices under the guise of confidentiality it has imposed on evidence in the US civil antitrust case," Silverman told Ars. "There is no commercial reason to have those documents under seal; it is simply a means for Intel to try to conceal its illegal behavior."
So what about those x86 patents?

In our conversation with the company, AMD made a strong distinction between a technology license agreement, in which one company furnishes another with a vital ingredient or special sauce necessary to the function of a product, and a patent license agreement, in which two companies agree not to sue each other for intellectual property (IP) infringement. AMD's point here is rather simple: AMD neither needs nor receives any technological help from Intel when designing x86 processors. In the event that the cross-license agreement between the two companies were to be canceled, there's nothing stopping AMD from continuing to build its current products or designing future ones.

From AMD's perspective, the distinction between patent licensing and technology agreements is nontrivial; Sunnyvale is alleging that part of the reason Intel is alleging a material breach is to spread FUD within the media, the market, and potential AMD/Globalfoundries partners. In the event that the two companies cannot agreeably mediate the problems within the next 60 days, one or both of them will almost certainly file suit against the other.

AMD believes it has a strong position if the situation turns into a patent slugfest. While it's true that Intel holds the x86 patent, AMD noted to Ars that it has a number of patents of its own, including some related to the functionality of integrated memory controllers, the x86-64 instruction set, and x86 multicore configurations. The company also hinted that it may hold patents regarding the creation of an integrated CPU+GPU product on a single die—the so-called "Fusion" parts that now appear on the roadmaps of both companies.

AMD believes that any legal actions Intel might initiate as a result of this dispute would probably be sorted out in a theoretical settlement of AMD's court case against Intel (currently scheduled to begin in early 2010). Intel, for its part, isn't talking legal strategy or patent war chests; Intel spokesperson Chuck Mulloy told Ars that "the next step is mediation as outlined in the 2001 agreement. We hope to find a way to resolve this matter."
Source: http://arstechnica.com/hardware/news...-staredown.ars

I didnt quite get it Does that mean any1 can produce an x86 compatible CPU? :S

[CvP]

I didnt quite get it Does that mean any1 can produce an x86 compatible CPU? :S

That's FUD from AMD.

[Codex]

duh!everyone will try to save their own ¤¤¤!