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Analysis: What's next after Intel-AMD settlement?

Posted: 16 Nov 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Intel AMD settlement? microprocessor? processor? antitrust Intel?

Financial boost
Speaking of balance sheets, the $1.25 billion Intel agreed to pay Intel can now be used to help reduce the company's indebtedness, improving its overall financial outlook and rating with credit rating agencies. For GlobalFoundries, the deal means it no longer completely depends on a close ownership structure with AMD, giving it the freedom to engage with other semiconductor companies as a truly independent wafer supplier.

That's not all. The pending lawsuit was threatening to make a major dent in AMD's already bruised checking account. Had the Delaware lawsuit gone to trial, AMD's general and administrative expenses would have risen astronomically at a time when it needs all its available cash for R&D as well as marketing functions. "Of course our selling, general and administrative expenses will go down," predicted Meyer without elaborating.

Wall Street reacted positively to the settlement. "We believe that a settlement represents a major strategic and financial positive for AMD [and] we also view the resolution of the disputes as constructive for Intel," said analyst Timothy Luke, who tracks both companies for Barclays Capital.

"I assume that Intel's backroom behavior will no longer be allowed under this new agreement, and that's what AMD has been fighting for," added Nathan Brookwood, principal of market watcher Insight64.

Brookwood was slated to appear at the Delaware civil trial as an expert witness for AMD.

"Intel maintained it behaved in the bounds of the law, and now no court will judge them to see if they met that standard," Brookwood said. "The civil case was going to be a jury trial, and there's always an unknown on how the jurors will see the case," he added.

Finally, the settlement leaves Nvidia Corp.'s case against Intel as the only other U.S. lawsuit with antitrust implications. The graphics chip designer is essentially charging Intel will not provide it a license to one of its new processor interconnects. That prevents Nvidia from building chip sets.

However, Intel and AMD are both expected to integrate graphics inside most of their mainstream PC processors over the next few years. That substantially reduces Nvidia's chip set opportunities, even if the company could obtain a license.

- Bolaji Ojo
EE Times

Christoph Hammerschmidt in Munich, Germany, along with Rick Merritt and Dylan McGrath in Silicon Valley contributed to this report.

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