SANTA CLARA, CA — (Marketwire) — 01/10/2011 — NVIDIA announced today that it has signed a new six-year cross-licensing agreement with Intel.
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 and Intel have also agreed to drop all outstanding legal disputes between them.
Like Jen-Hsun Huang, NVIDIA’s president and chief executive officer, said:
This agreement signals a new era for NVIDIA. 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.
Pursuant to U.S. GAAP, a portion of the proceeds will be accounted for and attributed to the settlement of prior legal claims. This amount, which NVIDIA anticipates to be less than $100 million, will be included in the company’s fourth-quarter results.
The balance of the licensing fees will be accounted for on a straight-line basis over the six-year term of the agreement. Accordingly it is anticipated that this would amount annually to approximately $233 million of operating income and an increase in net income of $0.29 per diluted share, on a full year basis.