On a Monday afternoon conference call addressing the new agreement, NVIDIA CEO Jen-Hsuan said the following:
"The cross-licensing agreement allows Intel to integrate NVIDIA technologies and those that are covered by our patents into their CPUs, such as Sandy Bridge, for example. And a cross-license allows us to build processors and take advantage of Intel patents for the types of processor we're building—Project Denver, Tegra, and the types of processors we're going to build in the future."Sandy Bridge is an excellent example of where this deal could help Intel. Although the graphics in Intel's new Sandy Bridge chipset are twice as fast as prior Capella-based chipsets, it's not as though Intel can't use more help in that area.
Despite the deal, these two companies have plenty to argue about, still. After all, Microsoft described how its next version of Windows will run on ARM CPUs. That includes NVIDIA's version, and Intel might need to be concerned about that, despite the fact that for full-fledged laptops and desktops, it has nothing to be concerned about from NVIDIA. Ah, yes, NVIDIA addressed the so-called and long-running NVIDIA x86 rumor, with Jen-Hsuan saying:
"We have no intentions of building x86 processors. Our intention is to capitalize on the growing popularity of ARM processors [...] We've always felt that building yet another x86 processor when the world is a-flood with them is a pointless exercise. NVIDIA wants to build the processor of the future."You can read the full press release below.
Intel to Pay NVIDIA Technology Licensing Fees of $1.5 Billion
New Six-Year Cross-License Renews Previous Agreement
SANTA CLARA, CA -- (Marketwire) -- 01/10/2011 -- NVIDIA announced today that it has signed a new six-year cross-licensing agreement with Intel.
For the future use of NVIDIA's technology, Intel will pay NVIDIA an aggregate of $1.5 billion in licensing fees payable in five annual installments, beginning Jan. 18, 2011.
NVIDIA and Intel have also agreed to drop all outstanding legal disputes between them.
"This agreement signals a new era for NVIDIA," said Jen-Hsun Huang, NVIDIA's president and chief executive officer. "Our cross license with Intel reflects the substantial value of our visual and parallel computing technologies. It also underscores the importance of our inventions to the future of personal computing, as well as the expanding markets for mobile and cloud computing."
Under the new agreement, Intel will have continued access to NVIDIA's full range of patents. In return, NVIDIA will receive an aggregate of $1.5 billion in licensing fees, to be paid in annual installments, and retain use of Intel's patents, consistent with its existing six-year agreement with Intel. This excludes Intel's proprietary processors, flash memory and certain chipsets for the Intel platform.
The existing agreement is to expire March 31, 2011.
Pursuant to U.S. GAAP, a portion of the proceeds will be accounted for and attributed to the settlement of prior legal claims. This amount, which NVIDIA anticipates to be less than $100 million, will be included in the company's fourth-quarter results.
The balance of the licensing fees will be accounted for on a straight-line basis over the six-year term of the agreement. Accordingly it is anticipated that this would amount annually to approximately $233 million of operating income and an increase in net income of $0.29 per diluted share, on a full year basis.
