Chipmaker Intel will pay $1.5 billion in technology licensing fees to graphics firm Nvidia as part of a new agreement revealed by the two companies this week. The deal also settles all outstanding lawsuits between the firms.
The total amount will be paid in five annual installments, beginning January 18 this year, Nvidia said in a statement. The company's GPUs can be found in gaming PCs as well as PlayStation 3, among many other platforms.
The partnership means Intel will have "continued access" to Nvidia's full range of patents, while Nvidia will have access to certain Intel patents in accordance with an existing six-year agreement, which ends in March.
The new deal "excludes Intel's proprietary processors, flash memory and certain chipsets for the Intel platform," meaning Nvidia cannot manufacture Intel's x86 chipsets, a prospect that Nvidia has stated it's not interested in pursuing.
But the agreement does clear the way for Intel to integrate Nvidia-patented graphics technology into its microprocessors. Intel this month formally announced the Sandy Bridge microprocessor, which has integrated graphics.
The two companies also agreed to drop all outstanding lawsuits against one another. Nvidia and Intel were engaged in a legal dispute beginning in 2009 involving a chipset licensing agreement.
A portion of the money from the new cross-licensing deal will be used to settle the legal claims. Nvidia expects that amount to be under $100 million.
"This agreement signals a new era for Nvidia," said Nvidia president and CEO Jen-Hsun Huang in a statement. "Our cross license with Intel reflects the substantial value of our visual and parallel computing technologies."
He added, "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."
Nvidia expects Intel's licensing fees to bring in around $233 million of operating income annually over the course of the agreement, and increase net income by 29 cents per share on an annual basis.