Intel alleges AMD breached its cross-licensing pact

The chip giants look like they’re heading toward a hot war. Intel said that Advanced Micro Devices has breached a licensing pact that has been in place since 2001.

AMD said in a document filed with the Securities and Exchange Commission that Intel sent a letter regarding the legitimacy of the pact in light of AMD’s split into two companies. Intel said that AMD’s division into a design business and a manufacturing business, the latter known as Globalfoundries, breaches the agreement, which allows AMD and Intel to build compatible microprocessors for the PC.

“AMD cannot unilaterally extend Intel’s licensing rights to a third party without Intel’s consent,” said Bruce Sewell, Intel’s general counsel, in a statement. “We are willing to find a resolution but at the same time we have an obligation to our stockholders to protect the billions of dollars we’ve invested in intellectual property.”

Intel had previously raised doubts about AMD’s interpretation of the agreement. Dirk Meyer, chief executive of AMD, emphatically said in the past that the agreement allows AMD to extend its cross license to its new subsidiary, Globalfoundries. The government of Abu Dhabi has supplied much of the capital for Globalfoundries, but AMD retains voting control and thus defines Globalfoundries as a subsidiary. Intel evidently disagrees and considers Globalfoundries to be a third party. Intel claims that AMD’s deal violates a confidential portion of the agreement.

Intel said it would terminate AMD’s rights in 60 days if an agreement isn’t reached. AMD has been trying to get government bodies in the U.S., South Korea and the European Union to bring antitrust actions against Intel. AMD said in a statement that Intel’s action is an attempt to distract the world from its antitrust problems and that Intel is violating the agreement itself by trying to interfere with AMD’s business relationships.

Meanwhile, Intel recently sued Nvidia over a cross-license agreement about whether Nvidia had the right to make chip sets for Intel’s newest microprocessors.