IT OCCURRED TO us here at the INQ recently, that AMD's European antitrust beef with Intel, may in fact just be a massive game of (Austin) Texas Hold ‘Em, with plenty of chips on the table.
It's fairly obvious what Intel has to lose if the European commission's antitrust probe finds it guilty as charged, but what would AMD really have to gain? A little settlement? Hardly worth the bother. But the more we asked ourselves the question, the clearer it became in our minds.
AMD has little but gleeful vindication to gain from a guilty verdict, but much to gain from using the case (and its complaint against Chipzilla) as a bargaining chip. For instance, if AMD decided to drop its complaint, the firm might find itself suddenly entitled to all sorts of Intel goodies, including some sweet renewed X86 licences.
To understand the game, you have to go back to Intel and AMD's cross-licensing agreement on X86 processors. Although some terms of the deal are strictly confidential, it's widely known that somewhere in the mountain of legal paperwork is a clause stating AMD can only outsource a certain percentage of processor manufacturing to other firms (around 20 per cent). So there's effectively a 20 per cent cap on non-AMD produced wafers in the licence.
But after shedding its fabs to go 'asset light' and bequeathing its manufacturing capabilities to spin-off firm The Foundry Co, some have wondered whether Intel may have a case for either revoking the licence, or simply not renewing it.
More complicated is the fact that some 62 per cent of the Foundry Company is now owned by the oil sheiks of Abu Dhabi, meaning it's not even majority owned by AMD. AMD can spin till it's blue in the face, DAAMIT FC is not a subsidiary, it's a separate and separately-owned entity.
In the past, when we've asked AMD about the potential cross-licensing problems which could arise, we've been told there's nothing to worry about, and no one at the firm thinks Intel will seriously try and revoke the licence. But having a few strong cards to play doesn't do AMD any harm.
Since the contract is full of top secret clauses we don't know about, it's possible AMD is correct in saying it really doesn't have anything to worry about. Perhaps there's a 'change of ownership' clause in the contract which covers the whole Foundry Co issue, perhaps there are other loopholes, or perhaps, just perhaps, AMD is banking on the fact that Intel has better things to do with its time and money in the midst of a recession than to let loose its lawyers on the firm, revoking the licence the messy way. The fact is, we may never know.
What we do know is that the cross-licence contract is up for renewal in the next couple of years anyway, and whereas AMD might not be too worried that Intel will expend oodles of energy trying to pry the licence out of its hands, it may be a teeny tiny bit concerned that Chipzilla might choose not to renew it.
Of course, this would be a bit unlikely (*cough*, Intel X86 monopoly, *cough*) and pretty damn mean of Intel, but no one can blame AMD for taking precautions.
Finding its newly-acquired jewel ‘x86-less' would definitely put a crimp in the majestic ruler of Abu Dhabi's plans, leaving him quite sheiken, we imagine. A chance AMD can't exactly take seeing as his magnificence signs a great many cheques for the firm.
So, AMD will most likely play its advantage, using the complaint (and its potential dropping of it) as a powerful negotiating tool, with everything on the table – especially letting AMD unilaterally consign its x86 rights to the Foundry Company – to play for.
The antitrust case is clearly a large pain in Intel's rear end and, despite the fact there's no stopping EC wheels already in motion, AMD dropping the complaint would still have an effect. A desired effect, as far as Intel is concerned.
So, if we were the betting kinds, we'd put our money on AMD dropping the complaint like a hot potato any day now.
Then again, the firms – both of whom refused to comment on this story – could just have excellent poker faces. µ
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