AMD Gets Broader Rights to Outsource Chip Production

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An updated cross-licensing agreement between Intel and Advanced Micro Devices expands their rights to use third-party chip makers to manufacture x86 chips under certain conditions.

Among the third-party companies that will be covered by the deal is Abu Dhabi's Advanced Technology Investment Co., which holds a stake in GlobalFoundries, the former manufacturing arm of AMD, and is in the process of acquiring Singapore's Chartered Semiconductor, a contract chip maker. The buyout deal, which was approved by Chartered shareholders earlier this month, faces one more regulatory hurdle before it can be completed.

ATIC expects to close the acquisition before the end of this year. When that happens, ATIC will become Chartered's sole owner and Chartered -- which has produced processors for AMD in the past -- will effectively function as part of GlobalFoundries.

GlobalFoundries was at the heart of a patent lawsuit filed against AMD by Intel, which argued that the spin-off was not a subsidiary of AMD and therefore wasn't covered under the previous cross-licensing agreement between the two chip makers. That lawsuit was resolved as part of a settlement agreement reached between the two companies last week.

At the same time that AMD and Intel settled outstanding litigation between themselves, they also signed a new patent cross-license agreement that gives AMD the right to have x86 processors manufactured by third-party chip makers. The text of the revised cross-license agreement, which was redacted to hide some details, was filed with the U.S. Securities and Exchange Commission on Tuesday.

Under the terms of the revised agreement, GlobalFoundries, Chartered, or any other third-party chip maker can produce chips on AMD's behalf, provided that the "designs and specifications ... for the manufacture of such products are furnished in substantially completed form."

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