Intel Threatens AMD’s Right to Make Chips

amd_logo_us-enUPDATED Advanced Micro Devices (s AMD) said in a securities filing today that Intel (s INTC) has threatened its ability to make x86 chips, which includes AMD’s PC and server CPUs but not its ATI graphics chips. AMD licenses the right to the x86 architecture from Intel under a cross-licensing agreement, that is a well kept secret.

When AMD announced plans to spin out its fabrication plants in an attempt to reduce costs, we wondered if the deal would violate that licensing agreement, as most people in the industry believe that the cross-license has a provision about AMD manufacturing a certain percentage of its chips in house. AMD assured investors that the creation of Global Foundries (the deal closed March 2) would not affect its x86 license. Intel apparently disagrees, and according to AMD’s filing:

“… alleges that the Company [AMD] has committed a material breach of the Cross License through the creation of the Company’s GLOBALFOUNDRIES joint venture and (ii)¬†purports to terminate the Company’s rights and licenses under the Cross License in 60 days if the alleged breach has not been corrected.”

AMD of course, says that it has not violated the cross-licensing agreement, and that by threatening it with termination of the agreement, Intel has violated the terms of the cross-license. Cue the legal battle, likely to be fought in court mediation with the records sealed to protect the confidentiality of the cross-licensing agreement. Update: Intel says in a news release that it has asked AMD to make the relevant portion of the confidential agreement public, but so far AMD has declined.

This is the second IP licensing fight Intel has started in as many months. In February it went to court over a licensing dispute it has with Nvidia (s NVDA) concerning the GPU-maker’s ability to tie its graphics chips to Intel’s latest CPUs.