Intel to Pay NVIDIA Licensing Fees of $1.5 Billion

Intel will pay graphics chip designer Nvidia $1.5 billion to license its technology, settling a legal dispute and smoothing the way for better competition in PC processors.

For the future use of NVIDIA's technology, Intel will pay NVIDIA an aggregate of $1.5 billion in licensing fees payable in five annual installments, beginning Jan. 18, 2011, Nvidia annoucned today.

NVIDIA and Intel have also agreed to drop all outstanding legal disputes between them.

The agreement was a major victory for Nvidia. The deal gives Intel 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.

"This agreement signals a new era for NVIDIA," said Jen-Hsun Huang, NVIDIA's president and chief executive officer. "Our cross license with Intel reflects the substantial value of our visual and parallel computing technologies. It also underscores the importance of our inventions to the future of personal computing, as well as the expanding markets for mobile and cloud computing."

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.

Last week, Nvidia announced at CES 2011 it is developing an ARM-based PC central processor under the code name "Project Denver" and will aim them at everything from workstations to supercomputers, directly challenging Intel.

The legal dispute settled on Monday 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.