Intel vs. AMD Feud Ends With Whimper

Not with a bang but a whimper. One of the biggest corporate feuds in the history of U.S. business seemingly ended a couple weeks ago with barely a mention in the headlines.

Perhaps it was that, in this dreadful year, there are so many stories competing for news coverage -- even "Climate-gate" can't seem to get coverage in the traditional media -- that a mere settlement between two giant chip companies after 40 years of war isn't going to see much traction. Still, given that the two companies are Intel Corp. and Advanced Micro Devices Inc., and the product under dispute, the microprocessor, is arguably the most important piece of hardware on the planet, at least a little attention must be paid to the announcement.

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Here, in summary, is the official announcement: On Nov. 12, after more than six months of negotiations, the last of them taking place in Hawaii (because that's where the mediator lived) Intel agreed to pay AMD $1.25 billion in settlement of various anti-trust allegations made in 2005 by the latter, smaller chip maker. And that, it seems, is that.

But behind that announcement hides decades of history and a competitive battle between the two companies that helped define the modern world.

I'm not exaggerating when I say that. With tens of billions of microprocessors in use around the world, bringing intelligence to everything from games to computers to the Internet, these little devices, invented at Intel in 1969, have set the boundaries of modern life. They've also set the pace, thanks of course to Moore's Law, named after Intel's co-founder. Our view of the technological world as constantly becoming more powerful, cheaper and more ubiquitous is mostly due to the microprocessor.

None of that may have been true -- and the world might have been a very different place -- without the Intel-AMD feud. It began simply enough: In the early 1980s, Intel finally overcome its initial reluctance to divide its attention between memory chips and microprocessors and decided to focus on the processors, where it had (and, 30 years later, continues to have) market and technological dominance.

But there was one problem: customers, from NASA to IBM to the latest hot consumer electronics maker, refused to put their fate in the hands of a single supplier, especially one in an industry as volatile as semiconductors.

The Start of the War

So, Intel needed a second-source supplier to license and sell its chips. Intel chose its struggling Silicon Valley neighbor, Advanced Micro Devices, in part because it was unlikely to ever be a competitive challenge but also because Intel co-founder Robert Noyce had a soft spot for his old Fairchild employee, Jerry Sanders, whom he looked upon almost as a son.

The brash and flamboyant Sanders, one of the greatest marketers in high-tech history, had struggled heroically to build AMD and Noyce knew that an Intel second-source agreement would help get the company out of the financial woods.

It all went as planned for the first decade. AMD grew healthy and Intel went on to rule the world as the most successful and powerful company of the age. But, then, AMD got into financial trouble and, desperate, Sanders dug into the company's library of contracts, found the old Intel second-source agreement and decided to go full-bore into the microprocessor business by cloning Intel's own design.

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