Experts: Dispute with Intel won't choke supply of AMD chips

Intel's threat to pull its cross-licensing deal with AMD is unlikely to result in a shortage of AMD processors in the market, experts said Monday.

"Gosh, I'd worry more about a meteor slamming into the Earth," said Nathan Brookwood, a longtime analyst with Insight64, noting that very few patent lawsuits in Silicon Valley result in either party being forced to halt production.

[ Today, Intel warned AMD about its potential patent breach. | Related: Intel launches probe into AMD's spin-off plans. ]

Even as both Intel and AMD amp up their legal posturing and rhetoric, they will also "go on their merry way making their products," he said.

One reason is the terms of the 2001 deal struck by AMD and Intel which spell out that any dispute must be settled in state court or federal court in Delaware (see clause 9.8).

For Intel to get a court order to force AMD to stop making processors would take at least three years, according to Mark Walters, a patent lawyer in the Seattle office of Darby & Darby.

To hammer home how long such cases take, AMD sued Intel for broad antitrust violations in 2005. The case is expected to go to federal court next year.

Besides the propensity of patent cases to drag on for years, many end up being settled out of court or are used as negotiating leverage in other cases, Walters said.

"This is done all of the time, especially with big companies that have multiple legal positions that are somewhat conflicting," he said.

Intel did not reply to a request for comment.

But AMD argues that its spinoff of Global Foundries doesn't violate what appears to be the key clause 1.22 in the 2001 contract, which states that patents may be shared with subsidiary companies provided the subsidiary satisfies two requirements:

* Owns or controls or originally contributed (either directly or indirectly) at least 50 percent of the tangible and intangible assets of the subsidiary;
* Through voting shares or seats on the board, has 50 percent control of the subsidiary and also gets at least 30 percent of the profits and losses.

As has been reported before, AMD will own 34.2 percent of the joint venture while Advanced Technology Investment Co. (ATIC), a firm owned by the government of Abu Dhabi, will hold 65.8 percent after investing $2.1 billion and agreeing to put in between $3.6 to $6 billion of "equity funding" within five years.