Chipset battleground: Nvidia accuses Intel of breach of contract

Santa Clara (CA) – The chipset license dispute between Nvidia and Intel seems to get a bit more interesting as Nvidia now wants to terminate Intel’s license to Nvidia’s patents. Right now, it seems more like a flexing the muscles game rather than a serious confrontation. But we know that Intel is moving into a direction in which the company will not need Nvidia anymore, while Nvidia will need Intel – even if Intel may run into patent infringement suits.

Nvidia clearly is upset. The company today replied to an Intel filing that seeks a declaration that the current chipset license agreement between the two companies and Nvidia’s license of its MCP does not extend to Intel’s Nehalem micro architecture. Nehalem processors, which are shipping in rather limited volume at this time, have an integrated memory controller and it is a rather obvious move from Intel to say that it really does not need Nvidia’s MCP now to make its product more attractive to consumers.

Nvidia now said that it entirely agrees with Intel and still has the right to market its MCP for Nehalem processors. The company alleges that Intel’s move is a breach of contract and, as a result, now seeks to terminate Intel’s license to Nvidia’s “valuable  patent portfolio”.  

If we look back at the initial license agreement, Intel substantially benefitted from the agreement when Nvidia had the leading chipsets and graphics cards. In 2005 and early 2006, Nvidia was entirely focused on the AMD platform, which gave the green team an huge advantage over Intel, which at the time was caught in a trap of not being able to produce enough of its own chipsets (but was able to forge an alliance with ATI). With Nvidia’s chipsets, Intel’s processors became increasingly attractive, but Nvidia has become much more dependent on Intel’s product line as a supporting revenue source as well.

No we are seeing Nvidia moving into high-performance computing with its Tesla products, we know that Nvidia will be marketing a platform that competes with Intel’s Atom CPU, and we are hearing more and more rumors of Nvidia’s efforts to come up with an x86 processor. Intel, on the other hand will be releasing a discreet graphics card based on a many-core x86 architecture next year, which Nvidia claims will infringe on its patents.

So, consider the current filings as Nvidia and Intel sending out their scouts while the lawsuit armies are assembled in the back. Keep your eyes out on this one. This could get interesting.