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Advanced Micro Devices
Armistice for Intel and AMD

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By Roleplayer
November 13, 2009

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First of all, we don't and probably never will know all the details of the settlement.

One of the details that has since come out that was in the fine print is that AMD does not need to be the majority owner of GF. Since spinning off GF was worth many billions to AMD (who still had half ownership) that alone could be worth more than we were speculating about as possible payments. In terms of actual cash, this could add several billions to what AMD gets out of this deal, plus it resolves the possibility that Intel would eventually prevail in its suit that the GF spinoff violates their cross licensing agreement, which would put AMD out of business. If this was a death match, consider that possibility: AMD gouges Intel for $12B, then two years later Intel refuses all settlement offers on the GF spinoff and AMD can no longer make CPUs. AMD thought they were on solid ground legally with the GF spinoff, but Intel probably thought they were on solid ground legally with Intel Inside.

We also don't know the details of AMD's examination of Intel's marketing practices. We don't know if Intel is paying for AMD's legal fees. We don't know what other things got blended into the cross licensing extension. We don't know if there are poison pill agreements in place that could give AMD huge bucks if arbitration determines that Intel once again tries an end run around antitrust law to keep AMD down.

We do know that Intel has effectively announced a $1.25B mea culpa to the world. Think what that means: every CPU buyer out there with any brains will be thinking: "Why am I just automatically buying Intel, when I now know that Intel was paying my competitors to use Intel CPUs? How much did Intel rip me off back when they felt adequately threatened by AMD's products that they had to do this?" True, right now they'll probably come to the conclusion that Intel's a better buy, but it isn't a better buy for all price points. And some folks dislike cheats enough to just automatically go to the other guy. There's a car dealership in Fresno that *could* have had all my business forever (because of geography) that has lost at least two sales so far (one to LA, one to SF) because they *almost* cheated me on an extended warranty. But i digress.

We know that cash in hand today is worth far more than payment after the last appeal is filed.

We know that you would put 12 folks who couldn't find a way off jury duty into a room. What's more, it's possible they'd have to put 12 people who don't own PC's. AMD PCs would certainly be grounds for discharge by bias, I would think, and Intel PCs might be. So all these non-technical people (except for maybe some Apple owners) would have to follow damage arguments about transistor count and fab capacity and arguing about how many months sooner smaller lasers might have shown up if AMD had more demand and even more esoteric details about damages. No trial is a slam dunk.

We know that AMD's salesfolks, trying to nurture relationships for Fusion (which is now AMD's major future) can point to a billion dollars more as reason for why AMD will be alive until Fusion.

As AMD said, what they ever wanted was a level playing field. This settlement gives them that. I, for one, was expecting a bigger settlement, but maybe this settlement was as good as AMD could have gotten in my lifetime. Appeals, especially appeals involving a strategic manufacturer, can drag on forever.

Am I disappointed? A little. But back when the lawsuit was first filed, before I had learned as much as I know now, I would have been happy with $1.25B. In this bad economy, maybe that's worth more too.

In football parlance, I look at this as AMD being behind by three points in the last seconds of the game on Intel's five yard line. They kick a field goal as time runs out to tie the game, but Intel was offsides. Do they accept the penalty and go for the winning touchdown, or do they go to overtime? Most fans would want the team to go for the touchdown. Most coaches take the points and play overtime.