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Many skeptical of truce between chip rivals Intel and AMD

SAN JOSE, Calif. — Can Intel and Advanced Micro Devices, Silicon Valley's version of the long-squabbling Hatfields and McCoys, really get along?

The two chipmakers certainly sounded sincere when they ended their antitrust legal wrangling Nov. 12, with Intel agreeing to pay AMD $1.25 billion. Calling their relationship for more than 20 years "challenging and often acrimonious," their settlement vowed to alter that by "wiping the slate clean" and resolving future gripes "in a constructive manner."

While no one believes the two tough competitors will become fast friends, some analysts say that the legal costs of their incessant bickering forced a truce and that they can coexist as peaceably as those once-rancorous rivals, Microsoft and Apple. But others who have watched Intel and AMD scratch and claw in what has been the nastiest corporate cat fight in recent tech history doubt business will significantly change.

"Everyone should be very skeptical" about peace being maintained, said Tom McCoy, AMD's executive vice president for legal, corporate and public affairs. "We've had what I call tribal warfare for decades. But you know, at some point people have to put a stake in the ground and say, 'We're going to at least try to make a pivot.' Time will tell."

Because the settlement details steps the companies must take to resolve disputes before going to court, including holding quarterly meetings, "this will be very helpful going forward," added Intel spokesman Chuck Mulloy. "It's less expensive to get along."

The companies' legal brawling dates to 1987, when AMD of Sunnyvale, Calif., and Intel of Santa Clara, Calif., locked horns over AMD's right to use certain designs for making microprocessors, the brains of personal computers and other devices. AMD won a $10 million judgment back then. But the animosity continued. Claiming Intel was now hindering its ability to sell chips to computermakers, AMD in 2005 filed a lawsuit that was among the matters settled Nov. 12.

U.S., Asian and European authorities also have launched investigations into Intel's practices, resulting in the European Commission's recent $1.45 billion fine of Intel, which the company has appealed.

The genesis of the Nov. 12 deal was another legal spat involving Intel's claim that AMD had violated a technology-sharing agreement in spinning off its chipmaking operations in March. When that disagreement wound up in mediated talks in Maui in April, the two firms' lawyers decided to also try to resolve AMD's suit over its sales to PC makers.

"The working relationship of the AMD and Intel negotiating teams was very professional, very constructive," McCoy said.

While the settlement won't likely change Intel's market dominance, analysts generally agreed that Intel and AMD both benefit.

AMD's suit was set for trial in March and Intel executives feared having to pay billions in damages if they lost. In turn, AMD won Intel's pledge to avoid certain marketing practices AMD found objectionable, along with the $1.25 billion cash payment. Intel also lifted its objections to AMD's spun-off chipmaking operation, called Globalfoundries.

Many skeptical of truce between chip rivals Intel and AMD 11/19/09 [Last modified: Thursday, November 19, 2009 9:11pm]
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