SAN FRANCISCO, Jan 10 (Reuters) – Intel Corp (NASDAQ:INTL) said
it is paying graphics chip designer Nvidia Corp (NASDAQ:NVDA) a $1.5
billion licensing fee, settling a legal dispute over a license
to make chipsets and boosting Nvidia’s shares.
Under the agreement, Intel, the world’s largest microchip
maker, will be allowed to use some patents belonging to
Nvidia.
"Impressive, it’s a big number," said Doug Freedman, an
analyst at Gleacher & Company.
Many investors had expected a settlement, but it had been
unclear how much Intel might pay Nvidia and the $1 billion
payment was not built into the value of Nvidia’s stock, said
Kevin Cassidy, an analyst at Stifel Nicolaus.
Intel sued Silicon Valley neighbor Nvidia in 2009 and
Nvidia counter-sued in the fight over chipsets, which are
groups of integrated circuits that connect to the
microprocessor in a PC.
In 2004, Intel agreed to let Nvidia, which specializes in
graphics processors, design chipsets for its microprocessors,
while it would be able to use some of Nvidia’s technology in
its own chipsets.
But in its suit filed in a Delaware court, Intel said the
agreement did not extend to new microprocessors it later
launched with a new component called integrated memory
controllers.
Nvidia’s shares jumped 4.45 percent after hours after
closing up 3.83 percent. Intel’s shares were down 0.2 percent
after hours.
Nvidia, which had about $2 billion in cash at the end of
October, argued the license did apply and chief executive
Jen-Hsun Huang has said Intel was competing unfairly.
After the Santa Clara, California-based companies launched
their suits, Nvidia wound down its chipset business.
It has redeployed its chipset engineers to its mobile unit,
which Nvidia is heavily betting on to take advantage of the
tablet and smartphone booms.
Intel has been under attack from regulators and rivals for
years over aggressive pricing and sales tactics in marketing
its chips.
Intel’s microprocessors are the brains in 80 percent of the
world’s personal computers, making compatibility with Intel
architecture key for smaller chip makers.
Last week, Nvidia’s shares surged 29 percent as the
company’s new Tegra 2 mobile chip impressed investors at the
Consumer Electronics Show in Las Vegas.
Intel’s microprocessors are the brains in 80 percent of the
world’s personal computers, making compatibility with Intel
architecture key for smaller chip makers.
In August, Intel settled a U.S. Federal Trade Commission
complaint accusing it of using its market dominance to unfairly
stifle competition.
(Reporting by Noel Randewich and Dan Levine; editing by Andre
Grenon)