Intel (Nasdaq: INTC) and NVIDIA (Nasdaq: NVDA) are about to settle their licensing differences and smoke a nice peace pipe, according to a Bloomberg report. Citing the usual unnamed sources and a report from respected chip analyst Uche Orji of UBS, Bloomberg posits that the heated exchange of mutual lawsuits will end with Intel possibly paying NVIDIA a settlement and signing an extensive cross-licensing contract. In another potential sign of an impending settlement, the two companies have canceled a court date scheduled for next week.

Putting a stop to this tussle will let NVIDIA back into the chipset design game, and should also give Intel more access to NVIDIA's advanced graphics technologies. That's an area where Intel's own efforts have been found sorely lacking against leading technologies from NVIDIA and Advanced Micro Devices (NYSE: AMD).

Is Intel rushing to make this move in order to counter the threat from AMD's highly capable Fusion products? Building complete systems into one chip, or at least an integrated set of chips, is all the rage. Witness AMD's long-planned move into this space, as well as by the plethora of mobile chipsets made by NVIDIA, Qualcomm (Nasdaq: QCOM), or Texas Instruments (NYSE: TXN) that fit this bill. Augmenting Intel's powerful central processors with NVIDIA's graphics know-how would be a strong antidote to a sea of competitive pressures on Intel.

I'm inclined to believe this report, because Intel needs to partner up with NVIDIA rather than destroy it. An outright acquisition would likely fail on antitrust grounds, but a cross-licensed partnership would be just the ticket. NVIDIA gets less out of the suggested deal than Intel does, so a sorely needed cash payment to make up the difference should be on its way.

Add Intel, NVIDIA, and AMD to your Foolish watchlist to follow this three-way drama just a little bit closer.

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