AMD Could Block the Sale of Intel Due to a Cross-Licensing Agreement

Arthur T Knackerbracket has processed the following story:

Intel has faced severe financial and execution woes over the past couple of years, leading to all types of speculation about the future of the company, with the most recent rumors pointing to Broadcom's interest in taking over Intel's product business, as well as an alleged U.S. government intention to make TSMC run Intel Foundry manufacturing operations in a joint venture between Intel and the Taiwanese contract chipmaker. But there is an obstacle that many people overlook: the broad cross-licensing agreement between Intel and AMD, as observed by Digits-to-Dollars.

AMD and Intel have a broad cross-licensing agreement (in fact, multiple agreements, with the most recent signed in 2009) that allows both companies to use each other's patents while preventing lawsuits over possible infringements. This covers their entire portfolios, including CPUs, GPUs, and other innovations. AMD can produce x86-based processors with Intel's instruction set extensions, while Intel can incorporate AMD's innovations into its own CPUs.

However, neither can develop processors that work with the other's sockets or motherboards., and the agreement has strict conditions for termination. If either company merges, is acquired, or enters a joint venture that alters ownership, the deal ends immediately. In the event of one of these triggers, the two companies must negotiate a new licensing arrangement.

Although some market observers tie the AMD and Intel cross-licensing agreement directly to the 1976 agreement concerning the x86 instruction set architecture (ISA), this is not the case. The agreements include a variety of extensions to x86 (such as SSE and AVX) as well as other innovations that are inseparable parts of today's CPUs. While it is possible to build an x86 CPU without AVX, SSE, or other extensions, such processors will not be able to compete against modern counterparts. Thus, losing the license could be devastating to both AMD and Intel.

In addition to the x86 ISA and extensions, the broad cross-licensing agreement between the two companies covers other technologies, including GPUs, DPUs, and FPGAs. Therefore, if the agreement were terminated, it would affect virtually all of AMD and Intel's products, necessitating a renegotiation of the cross-licensing agreement.

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