Intel, Nvidia Are Seeking Settlement of Chip Dispute

Intel Corp. and Nvidia Corp. are in talks aimed at settling a legal dispute over the use of each other’s technology, two people familiar with the matter said.

The people, who asked not to be identified because the talks are private, wouldn’t outline settlement terms.

Nvidia, a maker of graphics chips, accused its larger rival in March 2009 of breaching a contract that let the companies use each other’s capabilities. A month earlier, Intel had asked a judge to say the cross-licensing agreement between the two companies was no longer valid.

Settlement of the lawsuit and counterclaim would let the companies avoid a possibly lengthy trial and give Intel access to the graphics capabilities it needs to compete with Advanced Micro Devices Inc., said Uche Orji, an analyst at UBS AG in New York. Intel may also have to pay a settlement, Orji said.

“Given the current regulatory backdrop, we expect Intel to avoid the public scrutiny of a trial that could cloud its access to Nvidia’s graphics and parallel computing patents, and may therefore settle with Nvidia,” Orji wrote in a research report.

The trial had been scheduled to begin Dec. 6 in Delaware Chancery Court in Wilmington, Delaware. The companies canceled the court date this week.

Gregory Williams, a lawyer at Richards Layton & Finger who represents Nvidia, and Martin Lessner, who works on behalf of Intel at Young Conaway Stargatt & Taylor, didn’t return messages seeking comment after business hours yesterday.

Intel rose 32 cents, or 1.5 percent, to $21.48 at 4 p.m. in Nasdaq Stock Market trading. It has gained 5.3 percent this year. Nvidia rose 60 cents, or 4.4 percent, to $14.21. Shares have fallen 24 percent this year.

Legal Wrangling

The dispute began when Intel, the world’s largest chipmaker, asked a Delaware judge to declare that a licensing agreement between the Santa Clara, California-based companies doesn’t cover future products.

Nvidia filed a countersuit alleging breach of contract and seeking a termination of Intel’s right to use some Nvidia patents.

The case is Intel Corp. v. Nvidia Corp., CA4373, Delaware Chancery Court (Wilmington).

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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