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.

Index The Future


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  • AmdInside - Monday, January 10, 2011 - link

    The way I see it, Intel traded top prospect rookies in exchange for a proven star. Intel gets most of the benefits now while NVIDIA may get bigger rewards in the future depending on how they play their cards (and invest their money). Reply
  • has407 - Monday, January 10, 2011 - link

    Thanks Ryan; very good synopsis.

    "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."

    At second glance the agreement would also seem to disallow it:

    1.8. “Intel Architecture Emulator” shall mean software, firmware, or hardware that, through emulation, simulation or any other process, allows a computer or other device that does not contain an Intel Compatible Processor, or a processor that is not an Intel Compatible Processor, to execute binary code that is capable of being executed on an Intel Compatible Processor.

    1.12. “Intel Compatible Processor” shall mean any Processor that (a) can perform substantially the same functions as an Intel Processor by compatibly executing or otherwise processing (i) a substantial portion of the instruction set of an Intel Processor or (ii) object code versions of applications or other software targeted to run on an Intel Processor, in order to achieve substantially the same result as an Intel Processor; or (b) is substantially compatible with an Intel Processor Bus.

    An interesting constraint, but IMHO likely to be at worst a mild speed bump. In 4-5 years we'll know better: maybe Nvidia will hit that constraint (IMHO doubtful as they'll have plenty of new workloads/apps); or the current trajectory will make it irrelevant (ok, we can't run your legacy x86 apps--who cares cuz we got plenty of other new and more important ones that people want).

    In short, that constraint appears to be Intel looking to the past and attempting to protect their legacy turf, while Nvidia looks forward and their lawyers yawn and say "yeah, whatever, talk to you in six years."
  • vol7ron - Monday, January 10, 2011 - link

    But x86 is still a superior product. Reply
  • has407 - Tuesday, January 11, 2011 - link

    OK, I'll bite...

    What does "x86 is still a superior product" mean? That the x86 ISA is superior? That processors using the X86 ISA are superior? That specific vendor implementations of x86 ISA are superior? Or what?

    And superior to what? We have an existence proof that x86 is demonstrably inferior in billions of cases. Otherwise why don't all those billions of routers, cell phones, microwave ovens, washers, dryers, refrigerators, cars, etc. use x86 instead of Z80, MIPS, ARM, etc. and their derivatives?

    Yes, "x86 is still a superior product" in some ways and for some applications, but the area is shrinking, so be careful what ground you choose and how you choose to defend it.
  • Tros - Tuesday, January 11, 2011 - link

    I can't tell if vol7ron is being ironic, or authentic, but this is the kind of junk I'd expect nVidia to run into for consumers.

    With retrospect, I could see the mobile-ARM market as lucrative and still booming, and the opposite of the desktop-market. Seems to me that nVidia is wagering everything, that their GPGPU + ARM architecture would beat Intel's SoC solution in terms of power-usage and parallel computation throughput.

    But vol7ron brings up a good point, that the PC-users (and gamers) really only know of x86. And it doesn't matter if there's a better architecture/SoC out there, because it doesn't run Starcraft/LabView/Fishbowl. Even with a library-blessing from Microsoft, an ARM+GPGPU system still might not be licensed to actually run what software people are locked to.

    Lord knows the developers are either slow to port across architectures (sans Apple). And nVidia is betting that somebody will take up the call for their ARM+GPGPU powerhouse. Microsoft might do it, but I've seen a lot of promising things Microsoft might do, that get axed. Apple might do it, but they've already been burned by straying from hardware too different than the norm. Linux/Android will definitely do it, but my enthusiasm for Linux distros depend on how well it runs Wine.
  • Haawser - Monday, February 13, 2017 - link

    Won't change anything. Even if Nvidia get to emulate x86, there's no way AMD will let them use x64. And x86 without x64 is less than useless. Reply
  • vol7ron - Monday, January 10, 2011 - link

    The way the article is worded, it seems like NVIDIA didn't have much of a claim, but because Intel had problems with AMD, the FTC just threw them in there. Basically, it makes it seem like the FTC is the bad guy. Seriously, though, the payment to NVIDIA shouldn't be more than AMD's, but the good thing to note, is that it's not a lump sum, so the NPV isn't as high as it would be.

    As for the EU, I would say "F-them", even if it came at a cost. I'm getting sick and tired of the EU quibbles. The only reason they're stepping in is because they want a piece of the pie too. The settlement with AMD/NVIDIA should be enough.

    It might be worth mentioning that Microsoft said they're going to support non-x86 chips as well. Thinking Denver, or something ARM-based.
  • has407 - Monday, January 10, 2011 - link

    The Intel-AMD and Intel-Nvidia disputes are completely different animals. They are completely unrelated, and involve very different laws and jurisdictions.

    Intel-AMD dispute involvea monopolistic practices and restraint of trade, which necessarily involved the FTC/EU. Intel-Nvidia dispute is a straight contact/IP dispute AFAIK.

    I don't see how that "makes it seem like the FTC is the bad guy." or how "the FTC just threw them in there" since the FTC (or EU) has no involvement in the Intel-Nvidia contretemps. Please enlighten.
  • vol7ron - Monday, January 10, 2011 - link

    Re-read the article if you're curious about how the FTC popped in.

    It's still unclear who was in the wrong. Not saying intel is innocent, but AMD outcome didn't help.
  • has407 - Tuesday, January 11, 2011 - link

    Ok, I get that the FTC was a lurker, and if Intel and Nvidia didn't settle, Nvidia might still goad the FTC into action to make life painful for Intel.

    What I would dispute is that the the FTC was much of a threat or substantially involved in this case, especially considering that the Nvidia-Intel spat preceded the FTC action (and was not initiated as part of an FTC complaint, although it subsequently contributed to it). The FTC effectively wemt MIA following the AMD settlement; as Ryan said "the FTC didn't get everything they wanted".

    In short, I think the FTC's actions had pretty much run their course, and their involvement (real or potential) likely had very little to do with the this Intel-Nvidia settlement. Was the FTC still a club Nvidia could weild? Maybe as an irritant to Intel, but as a substantive threat I doubt it, and this article (among others) does nothing to suggest otherwise. YMMV.

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