Intel's lawyers launch probe into AMD's spinoff plans

Chip maker says new fab company could force an end to its long-time licensing pact with AMD.

Intel's lawyers are evaluating whether a new manufacturing business spun out of Advanced Micro Devices could end a long-standing cross-licensing agreement between the firms.

On Tuesday, AMD announced plans to spin off its manufacturing operations into a separate company tentatively called The Foundry. The restructuring would let struggling AMD rid itself of the financial burden of running fabrication plants and provide a hefty influx of cash from its partner in the deal, Advanced Technology Investment Co. (ATIC).

Now, rival Intel is throwing a flag on the play.

"We certainly have to evaluate it," said Intel spokesman Chuck Mulloy. "It certainly could be a change in the competitive landscape."

Mulloy explained that Intel and AMD have licensed each other's patents since 1976. Among other things, the latest pact signed in 2001 calls for AMD to pay royalties to Intel for the use of its x86 architecture.

"Intel has serious questions about the AMD move as it relates to that licensing agreement," said Mulloy, who would not divulge how much AMD pays in royalties for the X86 architecture. "We don't have enough information. We will be evaluating it. Intel has an obligation to shareholders to protect its intellectual property."

Drew Prairie, a spokesman for AMD, told Computerworld that executives paid close attention to the restrictions in the company's various licensing agreements when making plans for the spinoff.

"We looked at this," he said. "We structured this in a way that this takes into account all our licensing agreements to ensure The Foundry will be able to manufacture all of AMD's products."

Mulloy said AMD did not contact Intel about the licensing agreements during the planning stage for the spinoff. He added that Intel has not yet reached out to AMD about it either.

The new company will be co-owned by AMD and ATIC, which is owned by the government of Abu Dhabi in the United Arab Emirates. ATIC will shell out US$2.1 billion -- $1.4 billion going to the new company and the rest going straight to AMD, according to AMD.

The Foundry will assume about $1.2 billion of AMD's debt.

Industry analysts noted after yesterday's announcement that by splitting off its manufacturing operations into a separate company, AMD could be on track to become the nimble, innovative company that once had Intel on the run.

"It's like the old AMD after a spa and rehab vacation," said Dan Olds, principal analyst with the Gabriel Consulting Group. "They've come back stronger financially and in better shape overall. They're still the same company and they still [partially] own their fab operations. It's like they got a rich uncle to help them out."

Word of the spin-off was welcome news to Wall Street yesterday, which responded by lifting AMD's stock by 18% Tuesday morning during the same period that the Dow dropped by 200 points, noted John Lau, a senior semiconductor analyst and managing director at Jefferies & Co., who had predicted the spin off early last month.

Lau said the spin off of the chip-fabrication operation is a necessary move for AMD. "This fab spin-out changes the equation on how to remain competitive," he said. "Now it's a design race."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags intelAMDThe Foundry

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sharon Gaudin

Computerworld
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?