AMD spun off its manufacturing division and would thereby use the new company to manufacture its own products as well as possibly products from other companies. Due to dwindling financial performance, this was something that AMD deemed necessary. However, Intel said that because the spinoff isn't a subsidiary of AMD, it does not confirm to the license agreement Intel signed with AMD in 2001--the license doesn't automatically transfer to a spinoff company.
From Intel's press release:
Intel Corporation today disclosed that the company has notified Advanced Micro Devices (AMD) that it believes AMD has breached a 2001 patent cross-license agreement with Intel. Intel believes that Global Foundries is not a subsidiary under terms of the agreement and is therefore not licensed under the 2001 patent cross-license agreement. Intel also said the structure of the deal between AMD and ATIC breaches a confidential portion of that agreement. Intel has asked AMD to make the relevant portion of the agreement public, but so far AMD has declined to do so. AMD's breach could result in the loss of licenses and rights granted to AMD by Intel under the agreement.
AMD filed with the U.S. Securities and Exchange Commission, saying that it did not breach any contractual or intellectual agreement with Intel, and based on the original contract, Intel does not have the right to terminate the contract. Intel, argues otherwise. Representatives from Intel said that Globalfoundries is a joint venture with several other companies, including Advacned Technology Investment Co (ATIC), and ATIC does not have a license agreement with Intel.
"AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," said Bruce Sewell, Intel's general counsel.
Essentially, Globalfoundries allows ATIC to manufacture x86 processors and chipsets. If Intel does go through with the x86 license termination, this would spell big trouble for AMD. Many large OEMs rely and buy from AMD, and if the contract terminated, it would allow Intel to legally go after companies still buying x86-based AMD processors.
AMD has 60 days to comply with Intel before Intel terminates the x86 contract.