Intel Will Pay AMD $1.25 Billion to Settle Lawsuits

The legal disputes between chipmakers Advanced Micro Devices (AMD) and Intel have been waging for quite some time now, and opened the door for possible antitrust action against Intel, the world’s number 1 make of computer chipsets. Now, however, the two companies have settled the lawsuits for $1.25 billion. The news was great for AMD, which has $3.2 billion in debt and will use the windfall to pay some of that down. The company’s shares also skyrocketed 22 percent yesterday after the news was announced. Intel also saw its shares rise modestly.

In all, the AMD-led lawsuits go back at least 12 years. Chief among AMD’s complaints were anti-competitive behavior. Intel makes roughly 80% of the CPUs that go into computers. Said Joanne Feeney, from FTN Equity Capital Markets of the deal, "It eliminates a large amount of uncertainty for both companies. $1.2 billion is a lot of money and I believe AMD will use it to accelerate their debt payment." While the announcement was good news for Intel despite the financial hit, it is not a guarantee that the FTC will back down its investigation into possible infringement.

Of the deal, AMD CEO Dirk Meyer said, "While this agreement is going to be transformational for the industry and the way it operates, the industry isn’t going to change like a light switch. It will take time for people to understand how operating conditions in the processor business have changed. But make no mistake, they have changed." With the news, AMD’s market value jumped from $3.6 billion to $4.4 billion.