Update! Report: AMD Says Intel is in Breach

[Updated--see foot note] Earlier today, we reported that Intel gave notice to AMD to rectify a situation with AMD's spinoff company, Globalfoundries. Intel not only filed complaint with AMD, but eventually sent a warning to AMD, indicating that if the situation isn't resolved, Intel would terminate a long-term intellectual agreement with AMD--essentially removing sanctions allowing AMD to engineer and produce x86 processors.

We spoke to AMD's Michael Silverman, and asked some questions. We asked AMD where it thinks Intel is wrong, and what would happen if Intel did go through with the termination. This is what AMD gave back to us:

"Intel’s action is an attempt to distract the world from the global antitrust scrutiny it faces. Should this matter proceed to litigation, we will prove that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license," said Silverman, AMD public relations.

In fact, AMD has already filed with the SEC, claiming that it did not violate the original terms, and that if Intel did terminate, it would be the one breaching the original contract.

"AMD remains in full compliance with the cross-license agreement. And as we’ve stated all along, the structure of GLOBALFOUNDRIES takes into account all our cross-license agreements.  We will continue to respect Intel’s intellectual property rights, just as we expect them to respect ours," commented Silverman.

When we asked AMD about Intel's intentions, Silverman told us, "we believe that Intel manufactured this diversion as an attempt to distract attention from the increasing number of antitrust rulings against it around the world. With a ruling from the European Commission and a U.S. trial date looming, and investigations by the U.S. FTC and NY Attorney General, the clock is ticking on Intel’s illegal practices - and yet with its dominant monopoly position it still tries to stifle competitors."

Although Silverman did not comment on specifically on the aspects of ATIC, he mentioned that the two-way agreement benefits both companies, not just AMD. Silverman indicated that part of the license, also allows Intel to take advantage of patents belonging to AMD, specifically 64-bit architectures, integrated memory controllers and other technologies.
 
"The AMD/Intel cross-license agreement is a two-way agreement, the benefits of which go to both companies. Intel leverages innovative AMD IP critical for its product designs under the cross license.  This includes AMD patents related to 64-bit architecture extensions, integrated memory controller, multi-core architecture, etc.).  The cross-license is very much a two-way street," said Silverman.

Silverman concluded: "In fact, we informed Intel that their attempt to terminate AMD’s license itself constitutes a breach of the cross-license agreement, which, if uncured, gives AMD the right to terminate Intel’s license."

AMD's filing with the SEC, on March 11th, states the following:

The Company [AMD] strongly believes that (i) the Company has not breached the terms of the Cross-License and (ii) Intel has no right to terminate the Company's rights and licenses under the Cross License. Under the terms of the Cross License, there is an escalating procedure for resolving disputes, and the Company has commenced the application of that procedure with respect to Intel's purported attempt to terminate the Company's rights and licenses under the Cross License. In addition, the Company has informed Intel that the Company maintains that Intel's purported attempt to terminate the Company's rights and licenses under the Cross License itself constitutes a material breach of the Cross License by Intel which gives the Company the right to terminate Intel's and licenses under the Cross License Agreement while retaining the Company's rights and licenses under the Cross License Agreement.

We are still waiting for an official response from Intel.

Update: We asked Intel if the original Reuters report on Intel terminating AMD's license to use x86 technologies was correct. Here is what Intel's Chuck Mulloy had to say:

Note quite right. We've given [AMD] 60 days to fix the issue or AMD's rights under the agreement are terminated. Not the agreement. Subtle but important differences.It would mean that [AMD] don't have the right to sell or market x86 architecture products. In terms of customers, we would evaluate that but it's far too early. Remember, by sending the "breach" letter to AMD we are merely executing a dispute resolution process outlined in the agreement with AMD.

We're waiting on a response back from Intel on AMD saying that if Intel proceeds with the termination, AMD would also terminate Intel's rights to use 64-bit, integrated memory controller and other technologies that AMD licenses to Intel.