Intel Pays AMD $1.25 Billion, Following That $1.5 Billion Fine
Update: Intel has now updated its Fourth-quarter financial expectations:
As a result of the legal settlement announced today with Advanced Micro Devices (AMD), Intel Corporation adjusted its fourth-quarter financial expectations to reflect the impact of the $1.25 billion settlement payment. Intel now expects spending (R&D plus MG&A) in the fourth quarter to be approximately $4.2 billion, up from $2.9 billion. In addition, the effective tax rate is expected to be approximately 20 percent, down from 26 percent. All other expectations are unchanged.
Original Article: According to reports, technology giant Intel has agreed to pay $1.25 billion to settle multiple disputes with rival chip manufacturer Advanced Micro Devices or AMD. These two companies have been feuding for years. Actually, decades. The Wall Street Journal notes that the two companies have had disputes as far back as the 1980s.
In 2005, AMD filed a suit against Intel, claiming that Intel was engaging in unfair competition by offering rebates to Japanese PC makers, who in turn would eliminate or limit purchases of microprocessors made by AMD or Transmeta. Here’s a little more history about the current dispute (via Wikipedia):
The complaint was filed in the U.S. District Court in Delaware in June 2005. The court date, originally scheduled for April 2009, has been pushed back to February 2010. One delay was due to the Korea Fair Trade Commission issuing Intel a fine of US$25.4 million. Some of the manufacturers involved in the case are Dell, HP, Gateway, Acer, Fujitsu, Sony, Toshiba, and Hitachi.
In February 2009 it was reported that Intel had spent at least US$116 million to date on legal representation on the antitrust suit. This was inferred from a US$50 million lawsuit filed by Intel against one of its insurers; the lawsuit disclosed that Intel had already exhausted US$66 million in coverage from two other insurers while fighting the antitrust lawsuit.
It appears that everything is now square between Intel and AMD, at least financially. The New York Times reports that the $1.25 billion settlement will resolve all of AMD’s regulatory complaints worldwide as well as suits in Delaware and Japan. In addition to the hefty sum of money, Intel has also agreed to abide by certain terms with regards to business practices.
Earlier this year, the EU fined Intel a record $1.5 billion. According to the NYT, the EU’s commissioner says the company’s settlement with AMD will not affect the EU’s decision on that fine.