Intel couldn’t afford to let it drag on. The world’s largest chipmaker announced on Nov. 12 that it would pay $1.25 billion to resolve allegations by Advanced Micro Devices that its larger rival competes unfairly in the market for computer chips.
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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.
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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.
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PC and server chips make up the majority of industry profits today. Still, demand for server chips may diminish as businesses replace large numbers of aging servers in data centers with a single server powered by fewer, more powerful chips. Meantime, demand is surging for mobile devices, many of which don’t require the computing power of relatively pricey x86 chips. Getting past the distraction of the AMD lawsuits helps Intel place greater emphasis on sales in markets now being inundated with ARM technology, says TBR analyst John Spooner. For…