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AMD claims Intel sowing 'uncertainty' over fab spin-off

Cross-licensing spat heats up (again)

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AMD said today that Intel wants to throw a wrench into the company's plans to spin-off its debt-dependent chip-manufacturing business to cause "uncertainty" as the deal nears its close.

AMD disclosed amidst its fourth quarter earnings today that the company received a letter from Intel on January 20 that requested a meeting to discuss whether the plan to create The Foundry Company violates a 2001 cross-licensing pact between the two chip-makers.

The agreement in question lets AMD use various Intel licenses and patents, so long as AMD doesn't transfer any of the technologies to a third party. (Only a heavily-redacted copy of the agreement is available to the public – alas, with all the juicy details removed.) Intel believes that the creation of The Foundry Company may violate the agreement because the spin-off qualifies as a "third-party" rather than a "subsidiary" of AMD under the deal.

AMD will own 44.4 per cent of The Foundry Company, while Abu Dhabi's Advance Technology Investment Company (ATIC) will hold the rest. Both AMD and ATIC will have equal voting rights.

According to a US Securities and Exchange Commission filing by AMD today, Intel also wants to discuss if AMD's 2006 acquisition of graphics card maker ATI qualifies as a "change of control" for the company, and therefore violates the pact as well.

AMD spokesman Drew Prairie said the letter was "another attempt by our competitor to cause uncertainty" as the company approaches the deal-closing next month. The company denies both of Intel's assertions in the SEC filing.

AMD chief Dirk Meyer said during today's earning call that the company's licenses for Intel patents "are perpetual," although "the agreement does expire this decade." He added that negotiations with Intel on the agreements will begin "over the next couple of quarters."

Intel spokesman Chuck Mulloy confirmed with El Reg that both issues were discussed in its letter, but said what AMD wrote in today's SEC filing is "irrelevant" to Intel's true motivations for requesting the discussions.

"We let AMD know we have concerns regarding our intellectual property rights," said Mulloy. "We have said from the outset that we have these concerns. At no point have we said we would prevent the execution of the [spin-off] deal.

"We have an obligation to protect our IP rights just like any asset," added Mulloy. "AMD is trying to put words in our mouths."

The formation of The Foundry Company remains on track to close, according to AMD president and CEO Dirk Meyer, within "24 to 48 hours" after AMD's shareholders vote - presumably favorably - on the plan at a shareholders' meeting on February 10. ®

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