AMD could block the sale of Intel due to a cross-licensing agreement

Intel
(Image credit: Intel)

Intel has faced severe financial and execution woes over the past couple of years, leading to all types of speculation about the future of the company, with the most recent rumors pointing to Broadcom's interest in taking over Intel's product business, as well as an alleged U.S. government intention to make TSMC run Intel Foundry manufacturing operations in a joint venture between Intel and the Taiwanese contract chipmaker. But there is an obstacle that many people overlook: the broad cross-licensing agreement between Intel and AMD, as observed by Digits-to-Dollars

AMD and Intel have a broad cross-licensing agreement (in fact, multiple agreements, with the most recent signed in 2009) that allows both companies to use each other's patents while preventing lawsuits over possible infringements. This covers their entire portfolios, including CPUs, GPUs, and other innovations. AMD can produce x86-based processors with Intel's instruction set extensions, while Intel can incorporate AMD's innovations into its own CPUs. 

However, neither can develop processors that work with the other's sockets or motherboards., and the agreement has strict conditions for termination. If either company merges, is acquired, or enters a joint venture that alters ownership, the deal ends immediately. In the event of one of these triggers, the two companies must negotiate a new licensing arrangement. 

Although some market observers tie the AMD and Intel cross-licensing agreement directly to the 1976 agreement concerning the x86 instruction set architecture (ISA), this is not the case. The agreements include a variety of extensions to x86 (such as SSE and AVX) as well as other innovations that are inseparable parts of today's CPUs. While it is possible to build an x86 CPU without AVX, SSE, or other extensions, such processors will not be able to compete against modern counterparts. Thus, losing the license could be devastating to both AMD and Intel. 

In addition to the x86 ISA and extensions, the broad cross-licensing agreement between the two companies covers other technologies, including GPUs, DPUs, and FPGAs. Therefore, if the agreement were terminated, it would affect virtually all of AMD and Intel’s products, necessitating a renegotiation of the cross-licensing agreement. 

Companies in the high-tech industry tend to sign broad cross-licensing agreements, but a big question is whether AMD is actually interested in signing such an agreement with Broadcom. Historically, Broadcom was primarily known for networking solutions and wireless technologies, but today the company is a major player in the storage, cybersecurity, and infrastructure software markets. Perhaps more importantly, it has emerged as a leading developer of custom AI processors, collaborating with virtually all major cloud service providers and hyperscalers. Acquiring CPU capabilities would make Broadcom a formidable competitor for AMD. At present, Broadcom, armed with both CPUs and AI processors, poses a greater competitive threat to AMD than Intel, the latter of which lacks a clear AI strategy. 

While Digits-to-Dollars suggests that AMD could ask Broadcom to help counter Nvidia’s dominance in the AI market by creating "AMD-friendly" networking interfaces and connectivity solutions, Broadcom’s priority appears to be strengthening its position in the data center market, where it currently lacks CPUs. Once the company acquires a general-purpose data center processor business — further strengthened by Intel's large client PC processor volumes — it will likely focus on developing its own AI data center platform consisting of CPUs and ASICs, rather than assisting AMD in competing with Nvidia. Of course, an industry-standard platform centered around open standards like Ultra Ethernet could make life easier for both AMD and Broadcom in their fight against Nvidia. However, competing with Broadcom will be more challenging for AMD than competing with Intel.

TOPICS
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

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  • jp7189
    Is any new player really looking to get in to x86?
    Reply
  • ravewulf
    I'm surprised AMD's 64-bit extensions to x86 (AMD64/x86-64) didn't get a mention given that Intel adopted it for all of their 64-bit x86 CPUs
    Reply
  • aldaia
    Amazing the turn of events in last decade.

    In 2015 the headlines where "Intel could block the sale of AMD due to a cross-licensing agreement"
    Reply
  • GenericUser2001
    With how the US government wants to keep Intel as a going concern (at least the fabs, but probably the designs too) I am pretty sure they could declare that agreement null & void for national security reasons if it really came down to it.
    Reply
  • Notton
    The only way I see an Intel breakup and sale going through is if AMD get's to buy all of Intel's IP for a bargain.
    If, by some miracle, Broadcom is allowed to buy Intel's IP, that might be the final nail in the coffin for x86.

    Practically everyone is using ARM at this point.
    AMD has rumors of an ARM design in the works.
    Intel doesn't even have rumors of an ARM or RISC-V design, so you can see how they're obsolete at this point.
    Reply
  • TerryLaze
    Admin said:
    Want to get Intel's product business? You will have to deal with AMD due to a wide patent cross-licensing agreement.

    AMD could block Intel sale due to a cross-licensing agreement : Read more
    Yeah and right afterwards they are going to stop making x86 at tsmc since AMD doesn't have an exclusive license either.
    That's what that cross in cross-license means, if AMD vetos anything then intel will do so as well.
    Reply
  • SonoraTechnical
    Anyone who buys Intel will end AMD licensing in an effort to eliminate/weaken one competitor while buying the other... World commerce is an ugly place....
    Reply
  • ravewulf
    GenericUser2001 said:
    With how the US government wants to keep Intel as a going concern (at least the fabs, but probably the designs too) I am pretty sure they could declare that agreement null & void for national security reasons if it really came down to it.
    That would mean neither Intel nor AMD could make x86 CPUs. They would have to create a new agreement that allows x86 to continue. As much as ARM advocates would like to see the death of x86 and as much as they've been predicting it for years, it isn't going anywhere anytime soon.
    Reply
  • GenericUser2001
    ravewulf said:
    That would mean neither Intel nor AMD could make x86 CPUs. They would have to create a new agreement that allows x86 to continue. As much as ARM advocates would like to see the death of x86 and as much as they've been predicting it for years, it isn't going anywhere anytime soon.
    What I meant was that the US government could in theory render just the portion of the agreement that requires approval for sales to be null, and force AMD to honor the licensing deal being transferred to a new company. Or just lean on AMD behind the scenes to "approve" the license transfer. Obviously the US government wants both AMD & Intel to be able to continue making x86 chips.
    Reply
  • BGA DRAM
    TerryLaze said:
    Yeah and right afterwards they are going to stop making x86 at tsmc since AMD doesn't have an exclusive license either.
    That's what that cross in cross-license means, if AMD vetos anything then intel will do so as well.
    In this case, only Intel's license would be invalidated, because the acquisition would result in a change in management.
    This clause was created because Intel was afraid that AMD would be acquired and the license would go to a third party, but it was not anticipated that Intel itself would be acquired.
    Reply