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Intel to Pay Nvidia $1.5 Billion

Under the deal Nvidia has agreed not to make chipsets for Intel’s latter day chips like Westmere, Nehalem and Sandy Bridge

Intel and Nvidia have resolved their litigation issues.

Intel has agreed to pay Nvidia a choice $1.5 billion over the next five years for access and use of all Nvidia's patents like its graphics widgetry.

Nvidia, in return, gets access to a limited subset of Intel patents, but none of Intel's sacred x86 widgetry.

Nvidia now says it has no intention of making an x86 chip, as it had suggested a couple of years ago, and is focusing on its ARM widgetry instead. It's got an initiative afoot called Project Denver to make the ARM chip into a server and supercomputer processor to harry Intel.

Under the deal Nvidia has agreed not to make chipsets for Intel's latter day chips like Westmere, Nehalem and Sandy Bridge, which is exactly what Intel sought to stop in 2009 when it asked a federal court to say Nvidia didn't have the contract rights for those chipsets. Nvidia countersued but dropped its chipset efforts anyway.

Intel has an existing license to Nvidia patents that expires in March and its general counsel Doug Melamed said the company considers the new deal, which expires at the end of March 2017, to be a continuation of that arrangement.

Intel, which like AMD is adding on-chip graphics to its processors, is supposed to pay Nvidia $300 million each January between now and 2013 and then $200 million a year from 2014 till 2016.

It said the $1.5 billion payment will be treated as a "liability totaling approximately $1.4 billion, on a discounted basis. Intel recognized an expense of $100 million in the fourth-quarter of 2010, classified as ‘marketing, general and administrative.' The remaining amount, approximately $1.3 billion, will be recognized as an intangible asset in the first quarter of 2011 and will be amortized into cost of sales over future periods."

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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