Intel will pay $1.5bn in agreement with Nvidia over chip licensing for PCs

City A.M. Reporter
INTEL will pay graphics chip designer Nvidia $1.5bn (£0.96m) to license its technology, settling a legal dispute and smoothing the way for better competition in PC processors.

The agreement was a major victory for Nvidia, sending its shares up more than four per cent after hours in recognition of the value of its high-end graphics technology to Intel.

The deal gives Intel, the world’s biggest chipmaker, the right to use Nvidia’s technology in its PC chips as graphics processing becomes increasingly important.

Nvidia gets to use some of Intel’s technology as it works to build its own PC central processors, using architecture licensed from Britain’s ARM Holdings.

Many investors had expected a settlement, but it had been unclear how much Intel might pay Nvidia and the $1bn payment was not built into the value of Nvidia’s stock, said Kevin Cassidy, an analyst at Stifel Nicolaus.

Nvidia’s shares jumped 4.45 per cent after hours after closing up 3.83 per cent. Intel’s shares were down 0.2 per cent after hours.

The legal dispute began when Intel sued Nvidia in 2009, and Nvidia counter-sued over licenses for technology used to make chipsets, which are groups of integrated circuits that connect to the microprocessor in a PC.