Advanced Micro Devices said that despite of Intel Corp.’s doubts, the cross-licensing agreement between the two chipmakers allows AMD to produce all of its x86 central processing units at a contract semiconductor manufacturer, not on its own fabs.

“We are completely confident the structure of this transaction takes into account our cross-license agreements. Rest assured, we plan to continue respecting Intel’s intellectual property rights, just as we expect them to respect ours,” said Drew Prairie, a spokesperson for AMD.

After AMD announced on intention to spin off its manufacturing facilities into a separate company presently called the “Foundry Company”, Intel Corp. said it had “serious questions” regarding the terms of the transaction and its legitimacy.

Under the terms of the agreement with Advanced Technology Investment Company (ATIC) based in Abu Dhabi, United Arab Emirates, AMD will own 44.4% and ATIC will own 55.6% of The Foundry Company’s fully-converted common stock upon its formation. Meanwhile, according to the terms of agreement with Intel, AMD cannot transfer Intel’s technologies to third-parties. Some also believe that AMD cannot produce more than 20% of its x86 chips outside the company.

If Intel is able to stop AMD from transferring its manufacturing to a third party, then AMD’s asset smart strategy since the core of the initiative is spinning off manufacturing facilities into a separate business, which will automatically reduce financial pressure on AMD, which has to keep equipment at the fabs up to date and also continually invest into new process technology.

But there are advantages in having manufacturing facilities: it is much easier to “wed” leading-edge microprocessor design to a state-of-the-art process technology if appropriate specialists work in one company. This will be a fundamental advantage for Intel Corp. going forward, the chip giant believes.

“One of the advantages of having your design team and manufacturing-process team in the same organization is that tight coupling creates a lot of nimbleness, speed and lowers costs,” said Chuck Mulloy, an Intel official representative, in an interview with MarketWatch web-site.

Tags: AMD, Intel, TFC