AMD claims x86 chip license deal will not cause issues with Intel

Posted on Friday, Apr 22 2016 @ 12:07 CEST by Thomas De Maesschalck
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One of the biggest surprises in AMD's earnings announcement was the technology license deal with THATIC. Lots of people are wondering what this joint-venture means in terms of the x86 cross-license agreement AMD has with Intel. Naturally, it was one of the things that came up in yesterday's Q&A session with financial analysts. Mark Lipacis from Jefferies asked if this is something that requires clearance from Intel and AMD CEO Lisa Su replied all of the technologies licensed are AMD technologies and that this shouldn't cause issues:
Mark Lipacis - Jefferies LLC
Thanks for taking my question. And I guess this is one of the most exciting developments that we've heard about in a while, the license agreement. And I was hoping that you could maybe provide some more color on that.

Could you help us understand – maybe just go back in time and just explain the cross license agreement that you have with Intel? What should investors understand about that? And assessing any kind of a risk associated with this IP agreement? Do you tell Intel that this is going on? And did you get clearance from them? Or is this something you just kind of run with? And do you have to wait for like regulatory approval to get this through or – and how should we think about timing and milestones? So that's a lot of questions. I'll stop there. Thank you.

Lisa T. Su - President, CEO & Non-Independent Director
Okay, Mark. This is Lisa. Thank you for your question. And regarding the JV that we just announced, yes, we are very excited about it, partnering with THATIC and really focusing on the Chinese market for server processors. What we are licensing in this agreement is microprocessor technologies and system-on-chip technologies. All of the technologies licensed are AMD technologies. So, there are no encumbrances from that standpoint.

We have closed on the deal, and we are starting execution of the deal. So, we've talked about, from a financial standpoint, there's a $293 million licensing payment over a number of years. What we expect is the first payment we received in the first quarter of $50 million-ish. And we expect that over the first two years that about half of the licensing payments would be paid upon completion of some development milestones.

So, overall for us, I talked about IP monetization in a very broad sense. For us, that includes patents as well as technology licensing. This one is very positive for us, not just from the standpoint that it leverages our IP, but it also gives us a very key partner in the Chinese market, which we all believe is going to be very, very important for datacenter growth going forward. So, hopefully, I addressed your questions there.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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