January 11, 2011 1:42 am

Intel to pay $1.5bn in Nvidia settlement

Intel is close to winding up extensive legal disputes surrounding its microprocessor business following an agreement to pay rival chipmaker Nvidia $1.5bn.

The deal represented an out-of-court settlement between the two Silicon Valley companies and is similar to one reached with another neighbour, AMD, in November 2009.

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Intel’s rivals have been named as victims of its alleged monopolistic practices in investigations by regulators in Japan, Korea, Europe and the US.

Intel’s chips are in four out of every five PCs sold and its settlements with AMD and Nvidia end its rivals’ complaints that Intel has used its superiority to try to exclude them from the market.

Nvidia and Intel said on Monday they had agreed to drop all outstanding legal disputes between each other.

A new six-year agreement for the cross-licensing of their technologies has been signed and Intel will pay Nvidia $1.5bn in licensing fees over the next five years.

Intel had also agreed a five-year cross-licensing deal with AMD and paid it $1.25bn, with AMD agreeing to drop all complaints.

The world’s biggest chipmaker settled its biggest outstanding case with regulators last August, when it agreed with the US Federal Trade Commission to use an open industry standard to make it easier for other chipmakers to connect their own products to its chips.

The technology has been moving faster than the legal arguments involving Intel over the past 10 years.

Last week, Intel introduced new processors combining graphics and media engines with the main processor for the first time.

This could reduce the need for separate graphics chips made by Nvidia.

However, Nvidia’s own graphics processing units are now challenging Intel’s chips as all-purpose processors and Nvidia is moving towards greater involvement in mobile computing, with chips based on the architecture of the UK’s Arm, rather than Intel’s x86 processor designs.

“This agreement signals a new era for Nvidia,” said Jen-hsun Huang, Nvidia chief executive.

“Our cross licence with Intel reflects the substantial value of our visual and parallel computing technologies. It also underscores the importance of our inventions to the future of personal computing, as well as the expanding markets for mobile and cloud computing.”

Nvidia shares were up 4 per cent in extended trading on the news in New York at $21.45, while Intel’s were flat at $20.69.

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