The Settlement

As was the case with the AMD/Intel settlement, today’s settlement with NVIDIA paints Intel as being the loser in the proceedings. Officially both sides are settling their differences and dropping their suits, however the terms of the settlement look to be in NVIDIA’s favor versus Intel’s favor.

The biggest (or at least, least ignorable) component of the settlement is a cash settlement between Intel and NVIDIA. Intel will be paying NVIDIA a total of 1.5 billion dollars as part of the terms of the settlement. This is larger than the EU fine ($1.45bil) and larger than AMD’s cash payout ($1.25bil). Notably, this is not a lump sum but rather will be paid in installments. As per the new six year cross-licensing agreement between the companies, Intel will be paying a portion of the settlement for each of those six years - $300mil on January 18th of this year, another $300mil on 2012 and 2013, followed by $200mil in 2014-2016. As a result this doesn’t give NVIDIA an immediate and large cash infusion, but it will add to their bottom line for the next several years; NVIDIA has never had a yearly loss larger than the Intel payments, so it’s safe to say that they are likely going to be in the black for the next six years even if their operations generate a loss.

The cash settlement goes hand-in-hand with the rest of the settlement, which settles the outstanding legal ambiguity about the previous Intel/NVIDIA chipset licensing agreement, along with establishing a new six year agreement between the companies that largely extends the previous chipset agreement.

The most notable bit here is that the chipset license agreement will now formally define that NVIDIA does not gain rights to DMI/QPI, which the agreement defines as being Intel processors with an on-chip/on-die memory controller. So while the company can continue to produce C2D chipsets, they will not be able to produce a Nehalem or Sandy Bridge chipset. This seems to be quite alright with NVIDIA, who claims they are done making chipsets – as far as we know they wound-down their chipset operations some time ago, and the GeForce 320M chipset (seen in Apple’s 13” and 11” notebooks) was the final chipset for the company. This also recognizes the long-term problem with producing a chipset for these processors, as with an on-die memory controller there’s little for NVIDIA to do on DMI-based CPUs beyond adding a south bridge (although we would like USB 3 support…). One way or another the 3rd party chipset market is dead.

Intel/NVIDIA Settlement
NVIDIA Gets NVIDIA Doesn't Get
1.5 Billion Dollars, Over six Years  
6 Year Extension of C2D/AGTL+ Bus License DMI/QPI Bus License; Nehalem/Sandy Bridge Chipsets
Access To Unspecified Intel Microprocessor Patents. Denver? x86 License, Including Rights To Make an x86 Emulator

NVIDIA also does not get an x86 license. x86 is among an umbrella group of what’s being called “Intel proprietary products” which NVIDIA is not getting access to. Intel’s flash memory holdings and other chipset holdings are also a part of this. Interestingly the agreement also classifies an “Intel Architecture Emulator” as being a proprietary product. At first glance this would seem to disallow NVIDIA from making an x86 emulator for any of their products, be it their GPU holdings or the newly announced Project Denver ARM CPU. Being officially prohibited from emulating x86 could be a huge deal for Denver down the road depending on where NVIDIA goes with it.

So what does NVIDIA get out of this? On top of the 1.5 billion dollars, much of it is a continuation of the status quo: the six year chipset agreement (amended to explicitly forbid QPI/DMI) will be extended another six years. However there’s one item that sticks out in our minds based on the NVIDIA conference call this afternoon: Denver.

Last week’s announcement of Project Denver firmly established that NVIDIA is making its bet on ARM and not x86, and today they reiterated that not having an x86 license is not a problem for the company because they don’t intend to make an x86 processor. However based on what little we know about Denver it certainly is going to compete with Intel’s CPUs at some level. To this end, NVIDIA specifically mentions that they are getting access to Intel’s “microprocessor” patents, excluding the x86 (and XScale) technologies we previously mentioned.

Although this is not laid out in the settlement (because the settlement refers to the original agreement, which is confidential), NVIDIA has made it clear that the agreement gives them the right to “take advantage” of Intel’s patents for the “types of processors” they’re building. Our best guess is that as a result this agreement includes at least a partial preemptive settlement over Project Denver. Just as NVIDIA has many GPU patents Intel has many CPU patents, and it may be difficult to build a desktop/server CPU like Denver without infringing on those patents. If this is the case then today’s agreement implies that Intel and NVIDIA are cross-licensing to the point that Denver is mostly safe from Intel. While Intel’s approval isn’t necessarily essential for Denver like it would be for an x86 CPU, it clearly is easier to build Denver without the risk of Intel suing the pants off of NVIDIA again.

Intel/NVIDIA Settlement
Intel Gets Intel Doesn't Get
Continued Access To NVIDIA's Graphics Patents ?
No NVIDIA Nehalem/Sandy Bridge Chipsets  
No sharing x86 With NVIDIA  

So we’ve established what NVIDIA gets, but how about Intel? The Intel situation looks to be much more straightforward. As we mentioned previously, NVIDIA and Intel originally cross-licensed in 2004 so that Intel could build IGPs using NVIDIA patented technologies and methods. That agreement was set to expire this year, which would have been a massive problem for a company whose CPUs almost always include a GPU. Today’s agreement with NVIDIA renews and extends that original agreement: Intel continues to cross-license with NVIDIA, allowing them to produce IGPs that use/infringe on NVIDIA patents. To be clear we believe this is a continuation of existing practices, and not any kind of agreement to integrate actual NVIDIA GPUs into future Intel CPUs as others have claimed elsewhere.

The rest of what Intel gets would appear to be gaining a market advantage through not having to give anything up. Intel doesn’t have to license x86 to NVIDIA, Intel doesn’t have to license DMI/QPI to NVIDIA, and if our reading is right Intel won’t have to face direct competition from NVIDIA using an x86-to-ARM emulator. This may not be an “exciting” outcome, but keep in mind that Intel already has some of the best gross margins in the chip industry, so to maintain status quo for the company is a big deal for them.

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  • 7Enigma - Tuesday, January 11, 2011 - link

    I tend to agree with this statement. Had there been other chipset makers at the launch of SNB the enthusiasts would have flocked to the Z67-similar mobo as the current offerings are crap. Reply
  • HangFire - Tuesday, January 11, 2011 - link

    On-chip x86 memory controller patents are owned by AMD, Intel violated those patents with Nehalem, that was the primary thing driving Intel to the bargaining table - paying off AMD to get access to those licenses.

    Intel cannot re-license those AMD patents to Nvidia, so Nvidia remains locked out of the on-chip memory controller x86 market.
    Reply
  • Stuka87 - Tuesday, January 11, 2011 - link

    Unless I am mistaken, if nVidia got the right to manufacture an x86 chip, any IP owned by AMD would have to be licensed from AMD, and not through Intel. Reply
  • HangFire - Tuesday, January 11, 2011 - link

    Yeah. That's what I just said. Intel cannot relicense AMD technology, so any IP owned by AMD would have to be licensed by Nvidia from directly from AMD, something not likely to happen. Reply
  • ash9 - Tuesday, January 11, 2011 - link

    Imagine a Sandy Bridge without a graphics engine (No next-gen for you-LOL Larrabee??) - Intel got a bargain; spread out over 6 years, is no-thing, I’m sure they would have paid a kings ransom- it would have been their death…Nvidia missed it

    asH
    Reply
  • pugster - Wednesday, January 12, 2011 - link

    Agreed. Intel paying off AMD for its integrated memory controller patents and Nvidia for integrated graphics patents. That's the big difference between a Sandy Bridge and a Core2duo cpu's. Intel says that they are going to have revenues of 13 bil because of Sandy Bridge this year, more than enough to pay off AMD and Nvidia for their IP's. A real bargain for Intel indeed. AMD and Nvidia should've be smart enough and license their technology to Intel and receive $x per every processor intel sells. Reply
  • quanta - Wednesday, January 12, 2011 - link

    It seems no one mentioned the SLI licensing that Intel has paid to NVIDIA prior to the settlement that 'allows' NVIDIA not to cripple SLI support at GeForce/Quadro drivers. That seems to be the only 'NVIDIA technology' that Intel ever gets out of the settlement, if the settlement is really just extending existing cross licensing deals. After all, the Intel HD Graphics has so far been based on PowerVR SGX cores licensed to Intel, it is unlikely for Intel to use new cores that that have incompatible instruction sets, especially now that Sandy Bridge-based CPUs include graphics cores that will get supported (or already supported?) by Intel compilers. Reply
  • tafreire2011 - Thursday, January 13, 2011 - link

    CrossFire support will end on Intel motherboards? Or not? Reply
  • cesthree - Tuesday, January 18, 2011 - link

    "If you ask Intel, NVIDIA’s agreement only covers AGTL+,"

    This was Intel's only mistake, allowing Nvidia to disgrace the AGTL+ with their presence.

    Stick to GPU's Nvidia; nothing past PCIE bus, please.
    Reply

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