For analyst Jack Gold, the AMD/Intel legal settlement announced today is a win-win for both companies. It will give badly needed cash to AMD, while it will help Intel remain a dominant player in all aspects of the computer chip marketplace in both current and future devices.
Viewed in this way, the $1.25B payment to AMD from Intel looks cheap!
More on Gold’s commentary:
Today, Intel and AMD announced that they are dropping all existing litigation between them – AMD’s persistent attacks on what it claims are Intel’s predatory sales practices and Intel’s counter claims of AMD’s unlawful appropriation of Intel IP transferred to GlobalFoundries when AMD divested its fabs to this joint venture. The legal wrangling has been an obsession for AMD and a diversion for Intel for several years now, and neither can afford to engage in such maneuvers anymore. The settlement is a win-win for both, although it may not have much affect on Intel’s continuing governmental anti-trust investigations around the world, and the win-win may be a little different than most analysis has indicated.
Intel’s payment to AMD of $1.25B may be seen by some as an admission of guilt that it indeed was behaving badly as AMD claimed. However, I see this another way, rather that Intel is offering AMD a badly needed cash infusion – a lifeline to make sure it stays afloat. Strategically, Intel can not afford to let AMD go out of business. It needs the competition – both to make sure it stays “paranoid” enough to design and manufacture industry leading chips (look what happened to Intel last time AMD was not competitive), and also to avoid the reality of complete monopolization of the PC market and all the additional scrutiny it would entail (yes, even more than Intel is already receiving). AMD gets much needed cash with which it can complete its transition to a fabless semiconductor company and to complete designs of its next generation processor and graphics chips to make it more competitive. So this is a Win-Win for both companies.
