Intel signals patent hurdle to AMD foundry plan

Intel has said it has “serious questions” about the effect a deal announced by Advanced Micro Devices (AMD) to spin off its manufacturing business and focus on chip design with have on a patent cross-licence between the two companies.

Intel spokesman Chuck Mulloy said that AMD and Intel have a patent cross-licensing agreement under which AMD pays royalties to Intel. “Intel has serious questions about this transaction as it relates to the license and will vigorously protect Intel's intellectual property rights,” Mulloy said of AMD's announcement.

Mulloy said Intel has asked AMD to make the agreement public but he said it would not, so he was not at liberty to discuss the matter in detail.

On Tuesday, AMD said it is to spin off its manufacturing operation to a joint venture that will be financed by a consortium of Abu Dhabi-based investment companies.

AMD claimed the investment will allow it to increase capacity at its Dresden fab and, assuming it can transfer state incentives to the new company, called The Foundry Company, will build a new fab in Saratoga County, New York. This, claimed AMD, will be the only “independently managed leading-edge semiconductor manufacturing foundry in the United States”.

Bill MacClean, president of analyst firm IC Insights, said: “This deal is a positive move for AMD’s balance sheet. However, this is a survival move, not a strategy that will help them gain market share.

“Given that The Foundry Company’s capital spending budget for the next five years is forecast to be less than AMD’s capital spending outlays over the previous five years, it is highly unlikely The Foundry Company will help AMD gain additional market share. In fact, AMD will be lucky to sustain flat market share in the microprocessor segment.”

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