Intel To Pay $1.5 Billion To NVIDIA In Licensing Deal

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News Posted: Mon, Jan 10 2011 4:55 PM
NVIDIA and Intel making nice? Hard to believe, but it's true. These two companies have been bickering and fighting for years now. There has been a rivalry nearly as intense as Microsoft vs. Apple, with NVIDIA and Intel executives making public remarks against each other quite often. But now, it looks like the war that we have watched for so long could be coming to a peaceful conclusion.

NVIDIA has just announced that Intel will be paying licensing fees of $1.5 billion over the next five years. That's big. Even bigger than the $1.25 billion that Intel was forced to pay to AMD in 2009. In just over a year, Intel has had to unload nearly $3 billion to rivals. We highly doubt Intel's shareholders are pumped about that. Can you imagine what kind of products you could unveil with that much cash? We're guessing NVIDIA's dreaming about it already.


The six-year cross-licensing agreement has been a long time coming. Under the agreement, Intel will pay NVIDIA an aggregate of $1.5 billion in licensing fees payable in five annual installments, beginning Jan. 18, 2011. Because of this, both companies have agreed to drop all outstanding legal issues between them, and according to Jen-Hsun Huang, NVIDIA's president and chief executive officer: "This agreement signals a new era for NVIDIA. 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.

Basically, this is a huge win for NVIDIA. That's a ton of money, no matter how you slice it. But it's also great for Intel to have a partner that doesn't hate them. Can you imagine what kind of products these two could create now that there's no fighting between them, and usage rights are cleared up? Time will tell!

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.

Conference Call
NVIDIA will conduct a conference call with analysts, investors and media to discuss the license agreement at 2pm Pacific Time (5pm Eastern Time). To listen to the call, please dial (706) 679 2572; conference ID #: 36343898. A live Web cast (listen-only mode) of the conference call will be accessible at the NVIDIA investor relations Web site www.nvidia.com/ir and at www.streetevents.com. The Web cast will be recorded and available for seven days. 
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3vi1 replied on Mon, Jan 10 2011 8:10 PM

Great news! I always felt like Intel was trying to screw them over on the patent deal. So, even if nVidia didn't walk away with rights for all chipsets, at least they got paid to make up for that fact.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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realneil replied on Mon, Jan 10 2011 9:23 PM

Maybe SLI will work right now on Intel based boards.

Dogs are great judges of character, and if your dog doesn't like somebody being around, you shouldn't trust them.

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realneil:

Maybe SLI will work right now on Intel based boards.

I kind of knew something fishy was going on , specially when the 1156 and 1155 chip sets PCI express bandwidth were limited to just a 16x !!

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^never had the problem... X58 all the way! 

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gibbersome replied on Thu, Jan 13 2011 10:59 AM

INTC's stock barely took a hit, but NVDA has been on a tear since October (up more than 100%). Thanks to Hothardware, I was well aware of Nvidia's potential.

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