WASHINGTON (AFP) -- Intel Corp. agreed to pay Advanced Micro Devices 1.25 billion dollars to settle the long-running legal dispute between the two chipmakers on antitrust and patent issues.

Intel, the world's biggest maker of semiconductors, is facing litigation in the United States, Europe and Asia alleging it abused its dominant position in the sector and the AMD settlement may help bring an end to its legal troubles.
The companies said in a joint statement that the settlement represents “a comprehensive agreement to end all outstanding legal disputes between the companies, including antitrust litigation and patent cross license disputes.”
“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,” the statement said.
AMD and Intel agreed to patent rights from a new five-year cross license agreement, and to give up any claims of breach of contract.
In addition to the payment of 1.25 billion dollars, which is to be made in cash within 30 days, Intel also agreed to abide by a set of business practice provisions.
In exchange, AMD will drop all pending litigation including a case in U.S. District Court in Delaware and two cases pending in Japan and will withdraw all of its regulatory complaints worldwide, the statement said.
Intel shares lost 0.81 percent on Wall Street on Thursday to 19.68 dollars while AMD shares soared 21.80 percent to 6.48 dollars.
Intel is already being investigated by the U.S. Federal Trade Commission and faces scrutiny from regulators around the world.
European Union antitrust regulators fined Intel a record 1.06 billion euros (1.45 billion dollars) in May, claiming the company abused its stranglehold on the semiconductor market to crush AMD.
Intel denied the charges and has appealed the EU ruling.
Intel last year also challenged an 18 million dollar fine imposed by South Korea's anti-trust watchdog.
The Intel-AMD agreement comes just a week after the attorney general of New York state filed an antitrust lawsuit against Intel alleging the chip giant engaged in illegal practices to dominate the market.
It accused the company of “exacting exclusive or near-exclusive agreements from large computer makers in exchange for payments totaling billions of dollars” and threatening retaliation against firms that did not fall in line.
Intel chief executive Paul Otellini, speaking to analysts and reporters in a conference call, said the company decided to settle with AMD because the antitrust case “became massive and promised to become even more so.”
“We have not wavered in our conviction that Intel has been in compliance with the law,” he said. “We have said we don't do the acts they accuse us of doing.”
Otellini said Intel hoped for a “successful resolution” of its appeal of the EC ruling and “strongly disagrees with the New York attorney general's case and believes it is entirely without merit.”
Intel chief administrative officer Andy Bryant said the company hoped the agreement with AMD would have an impact on the other cases. “I'm hopeful,” he said. “We'll continue to cooperate and hope to resolve those cases.”
Otellini and Bryant also stressed that the agreement with AMD did not address pricing practices as such discussions would violate the law.
AMD president and chief executive Dirk Meyer said the agreement seeks “to create a level playing field” in the processor industry and will move AMD “one big step closer to achieving our bold vision.”
AMD filed a lawsuit in 2005 in Delaware alleging a catalogue of abuses by Intel, including threats of retaliation against firms if they do not buy from Intel rather than AMD.
At the time of the lawsuit, Intel held a share of more than 80 percent of the market for microprocessors for the world's personal computers. AMD's share had slipped to just under 16 percent from about 20 percent in 2001.
Douglas McIntyre, analyst at 24/7 Wall Street, said AMD “has had a pretty strong antitrust claim against Intel” alleging that it “bullied customers using it huge market share.”
“It was okay for AMD to sell out rather than fight on for what might be several years, but it should have gotten a better price for its shareholders,” McIntyre said.