The sparks started flying after the SEC disclosed AMD had received a formal letter from Intel requesting a meeting and the two companies need to enter negotiations.

Antone Gonsalves, Contributor

January 23, 2009

2 Min Read

Intel on Friday denied claims from rival Advanced Micro Devices that the larger rival is trying to derail AMD's plans to spin off its manufacturing operations.

The two companies started trading barbs Thursday when AMD sent an e-mail pointing news organizations to a filing with the Securities and Exchange Commission that disclosed AMD had received a formal letter from Intel requesting a meeting on the current cross-licensing agreement between the rivals.

Intel contends that the separate manufacturing company AMD plans to form with the Advanced Technology Investment Co., formed by the Abu Dhabi government, would not be covered under the agreement, and the two companies need to enter negotiations to come up with a separate deal. AMD, on the other hand, believes the spin-off qualifies as a subsidiary, which would be covered under the agreement.

"We believe that the letter is another attempt by our competitor to cause uncertainty as we approach our Asset Smart deal closing next month," AMD spokesman Drew Prairie said in the e-mail. Asset Smart is the marketing term AMD uses for its spin-off strategy.

Intel on Friday denied it was trying to stop AMD's plans with ATI. The letter was meant as a formal request for a meeting, since AMD has ignored Intel's other requests, an Intel spokesman told InformationWeek.

"Intel has not and does not intend to block or any other way hinder the formation of the Foundry Co.," the Intel spokesman said. "What we're concerned about is the licensing rights."

He insisted that Intel is looking to settle the disagreement. "We certainly would be open to discussion and finding a way to resolve this," he said.

The Foundry Co. is the temporary name of the business AMD plans to open with ATI next month. The manufacturing company would handle AMD's processor production, as well as that of other chip-design firms. AMD would have a 34.2% stake in the company with ATI controlling the rest. AMD would receive $700 million from ATI in the deal.

AMD sent the e-mail the same day it reported a $1.4 billion loss in the fourth quarter and a 33% drop in revenue, which the chipmaker blamed on the slump in the PC market brought on by the global economic downturn. While AMD's loss was large, it was narrower than the same quarter a year ago.

Intel last week reported that fourth-quarter profits plunged 90% and revenue fell 23% as a result of the economic slowdown.

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