After AMD: Intel's Next Big Battle

On one hand, the agreement lets Intel and AMD move past the conflict that's put the companies at legal loggerheads for years, and it may help Intel resolve ongoing antitrust tussles with U.S. regulators. But a more important benefit of the agreement is that it lets Intel turn attention to what may become an even greater headache in the coming years: the challenge posed by ARM Holdings, maker of the technology used in chips running in a widening array of mobile devices, including the Apple iPhone. Intel "now gets to focus on its real long-term threat," says Jack Gold, founder of Gold Associates, a research firm. "No, it's not AMD—it's ARM Holdings." A host of chipmakers, including Qualcomm, Texas Instruments, Freescale, and Nvidia, license ARM technology to create chips for handhelds, phones, and other mobile devices. ARM-based chips are valued because they consume less power than the x86-based chips, which are made by Intel and AMD and power most of the world's computers and servers, the machines that run corporate networks. The benefits of Intel's agreement don't end there. Through the settlement with AMD, Intel silences the loudest voice accusing it of abusive behavior while at the same time keeping alive one of its most formidable competitors. The settlement in effect subsidizes AMD's plan to reduce debt, spin off cash-intensive manufacturing operations, and boost its research and development on new chips. Over time, that means a stronger AMD and helps Intel counter claims it wields too much power in the industry.