Intel and AMD today announced a comprehensive agreement to end all outstanding legal disputes between the companies, including antitrust litigation and patent cross license disputes.

In a joint statement the two companies commented, "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development."

Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion. Intel has also agreed to abide by a set of business practice provisions. As a result, AMD will drop all pending litigation including the case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide.

The agreement will be made public in filings with the Securities and Exchange Commission.

"Today, I am pleased to announce the last major component of that transformation ? in the form of a transparent and public agreement with Intel to create a level playing field in the x86 processor industry - taking us one big step closer to achieving our bold vision, "said AMD CEO Dirk Meyer today.

"Today marks the beginning of a new era... one that confirms that the game has changed for AMD. It is an important milestone for us, for our customers, our partners, and most important - for consumers and businesses worldwide. In addition, it represents the culmination many years of litigation and regulatory engagement," he added.

Competition authorities in Asia, Europe and the United States have taken action against Intel in recent years because of persistent complaints by AMD about the behavior of Intel, which makes 80 percent of the central processing units at the heart of all personal computers.

According to AMD's Chief Executive Officer Dirk Meyer, there are three key components to the agreement:

First, Intel has agreed to an important set of ground rules that AMD hopes will define the path to a free and open market in the microprocessor industry. Second, Aboth parties have agreed to a new patent cross-license agreement that gives AMD broad rights and the freedom to operate a business utilizing multiple foundries, and third, GLOBALFOUNDRIES has agreed to terms that allow them the freedom to operate as an independent foundry company, going forward, without being a subsidiary of AMD.