By Stacey Higginbotham, GigaOM Nvidia said today it had signed a new six-year cross-licensing agreement with Intel, in which Intel will pay the graphics chipmaker $1.5 billion in licensing fees and will end the legal dispute between the company over Nvidia’s right to attach its graphics processors to Intel’s latest chips. The settlement between the companies shows how fast things are changing for Intel and for the computing industry at large as power efficiency and battery life are trumping performance, and entertainment is winning out over productivity. On Intel’s side, it’s also losing the advantage of having its x86 architecture being the platform of choice for software vendors. Intel brought the suit in February 2009, claiming Nvidia was abusing its access to Intel’s x86, and that Nvidia couldn’t integrate its latest GPUs aimed at mobile devices with higher-end Intel chips, only the lower-performance Atom chips. But times have changed, as I predicted two years ago when I said Intel’s x86 architecture was losing ground compared with GPUs in the high-performance sector and ARM-based chips in the mobile sector. Om put it much more simply, calling Intel out as a mobile loser when compared with ARM-based platforms like those from Qualcomm and Nvidia. Now, on top of the announcement by Microsoft last week that it would port its Windows software to ARM-based chips and Nvidia’s decision to go after the high-performance computing and server market with a combined ARM-GPU chip, Intel has had to face reality. It suddenly isn’t in a position to high-handedly dictate the rules of its license to the x86 architecture; it now has to compromise on a much more level playing field. And Intel needs Nvidia too; its own GPU effort with Larrabee hit problems, and its other x86 rival, AMD, has produced a combined CPU-GPU chip based on a graphics processor and x86 architecture that’s fairly exciting. However, don’t count on a humble Intel for long. It has revised its architecture for better graphics performance with its Sandy Bridge platform and isn’t sleeping like AMD seems to have been when it comes to the threat to its business from ARM and mobile computing. On that note, AMD’s CEO Dirk Meyer resigned today, most likely as a result of AMD’s failure to move quickly a few years back into the mobile computing and now the tablet market. Even as recently as last June, AMD had no mobile story, with executive Rick Bergman telling me at our Structure conference that AMD doesn’t have “any immediate clients to serve the mobile form factor,” but that it planned to move forward on that. So the shift to mobile computing is causing reverberations around the silicon industry today that are less about what’s coming and more about the decline in power of the old guard. As for the Nvidia settlement, here’s are the details from the Nvidia release:
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.The monetary gains to Nvidia aren’t small change. The company currently has a market cap of $12 billion, and it says that the licensing fees 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. As computing becomes more about entertainment and less about productivity a host of companies are making their moves to make computing, fun, mobile and power efficient. But don’t expect Intel to give up its dominant role in the industry any time soon.