Intel to pay AMD $1.25 billion

By David Lawsky

SAN FRANCISCO (Reuters) - Intel Corp (INTC.O) will pay rival chipmaker Advanced Micro Devices Inc (AMD.N) $1.25 billion (754 million pounds) to settle all outstanding legal disputes, in a move that can hasten the resolution of Intel's antitrust troubles.

AMD, whose shares jumped 22 percent, agreed to withdraw essentially all its regulatory complaints and litigation against Intel, ending a global campaign that it has waged on the world's largest chipmaker for 12 years.

Some analysts said the deal takes the steam out of a pending U.S. Federal Trade Commission investigation into Intel's business practices.

But others said Intel has critics beyond AMD and its regulatory troubles are far from over. Among Intel's adversaries are graphics chip maker Nvidia Corp (NVDA.O) and New York Attorney General Andrew Cuomo.

Intel Chief Executive Paul Otellini denied any wrongdoing by the company but said it decided to settle the dispute with AMD to avoid the risk of a triple-damages finding by a jury.

"Intel got the fact that it was a major risk of a huge settlement in front of a jury," said Broadpoint Amtech analyst Doug Freedman. "It removes the coin-flip of a jury trial."

AMD has argued that Intel used illegal means to preserve its 80 percent share of the global market for central processing units, which are the brains of personal computers.

Regulators in Asia and Europe have agreed, imposing fines and other remedies on Intel. The U.S. Federal Trade Commission is close to filing its own complaint, sources have said.

FTC Chairman Jon Leibowitz said the agency will review the settlement and could not comment further because of its ongoing investigation. Otellini said Intel will meet with the FTC to explain the settlement.

Experts have said it is in Intel's interest to resolve its antitrust troubles as quickly as possible so it does not wind up like Microsoft Corp (MSFT.O), which has spent a decade fighting competition agencies around the world.

IN COURT AGAINST NVIDIA

If the FTC goes ahead with its complaint, Intel will have to address broader questions on its business practices that go beyond its dealings with AMD.

"If they (FTC) were going to file a lawsuit, they're going to file a lawsuit. It will have no impact," John Briggs, antitrust attorney with Axinn Veltrop Harkrider LLP said of the AMD settlement.

The AMD deal covers central processing units and has nothing to say about the fast-growing market for graphics processing units, which facilitate pictures and video on PCs.

Graphics chip maker Nvidia is already in Delaware court with a patent dispute with Intel, and said its ability to compete is being squelched by the larger company.