Intel, Nvidia Bury Hatchet For a Mere $1.5 Billion

Alan Fackler

Intel will pay Nvidia $1.5 billion as part of a cross-licensing deal that will also see the end of the legal hostilities between the two Santa Clara, Calif.-based companies.

Never the best of friends , the two have been locked in battle even before Intel sued Nvidia in 2009 to prevent it from making chipsets for its Core i7 processors. Nvidia fired back at Intel with a lawsuit that tried to cancel a cross-licensing deal Nvidia had with Intel for graphics.

In the end, despite its enormous war chest, it was Intel that blinked.

The settlement ends the legal bickering and lets Intel integrate unspecified Nvidia technology in to its products and lets Nvidia access certain Intel intellectual property as well. Oddly, though the legal battle began as a fight over core PC technology – chipsets – it ends without Nvidia getting access to that segment. As part of the settlement, and licensing deal, Nvidia still is not permitted to make chipsets for Intel processors nor make x86 chips using Intel technology.

Despite this, Nvidia could hardly give a damn. And it’s not just the $1.5 billion payout either. Nvidia has been riding on an ARM high since it was revealed that Microsoft would be developing Windows for ARM and the best tablet and phone to come out of CES used Nvidia’s Tegra 2 chips: Motorola’s Atrix and its Xoom.

“We’ve already said that we have no intention of building chipsets for Intel processors,” Huang said during a briefing announcing the settlement and cross-licensing deal. Huang also again put the kibosh on long-standing rumors that the company was pursuing its own x86 chip. “We have no intention of building x86 processors.”

“With Microsoft’s important announcement of support for ARM with the next Windows, I think that it’s a foregone conclusion that ARM is likely to be the most important CPU processor of the future,” Huang said. “

Neither Intel nor Huang spelled exactly what technology would be used immediately, but Huang said certain technologies could go into Sandy Bridge and certain Intel technologies could go into Tegra 2 and Project Denver, the company’s plan to build powerful ARM chips for desktops and servers.

One analyst Maximum PC spoke with said he believes that Intel’s new Sandy Bridge chip may contain intellectual property from Nvidia and if Nvidia won its suit seeking to cancel the cross licensing deal with Intel, it could have scuttled Intel’s entire lineup.

Intel officials released a curt statement addressing the settlement and licensing deal and also released the cross licensing agreement itself.

"This agreement ends the legal dispute between the companies, preserves patent peace and provides protections that allow for continued freedom in product design," said Doug Melamed, Intel senior vice president and general counsel. "It also enables the companies to focus their efforts on innovation and the development of new, innovative products."

Rob Enderle with the Enderle Group said Intel may have made a strategic mistake when it decided to push Nvidia out of the chipset market by suing it. With only two choices in graphics, and one of them run by your competitor, it probably wasn’t a good idea to piss off the only other vendor who happened to own a ton of intellectual property in graphics. With even Intel recognizing the power of graphics processing, Enderle said he thinks even Intel couldn’t fight a war on two fronts.

“Intel can’t stay at constant war with both (Nvidia and AMD),” he said.

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