Intel has reportedly finally sealed adeal with AMD to license Radeon graphics technology from the Sunnyvale based chipmaker. Intel's previous licensing deal with NVIDIA ended in March and to prevent any litigatory gaps from occurring the chip giant has reportedly already begun paying licensing revenue to AMD. Anannouncement of the new deal is expected to take place at both companies' Q2earnings releases.

This developmentcomes after rumors surrounding agraphics licensing deal with Intel and AMD had been circulating for months.

Why Intel Licensed IP From NVIDIA To Begin With

In 2011 Intel signed a graphics licensing deal with NVIDIAwhichincluded a $1.5 billion dollar payment made overfive years. The deal was never intended to allow Intel to actually make any graphics chipswith NVIDIAtechnology, rather it merely served as a shield against patent infringement litigation.

IntelHires AMD as Its New Bodyguard

The purpose of the new graphics licensing agreement, just like the original, is to protect Intel from patent trolling. The deal that the company signed with NVIDIA in 2011 was actually to settle a lawsuit by the latter over claims of patent infringement.

Both AMD and NVIDIA holda massive portfolio of patents developed over decades that havedefined moderngraphics architectures Due to the complexity of modern graphics chips, for Intel or any other company to attempt TO build its own it wouldhave to navigate through a legal minefield. The only way to come out at the other end in one piece isto makea deal with either of the twobig graphics players.

The million dollar question is why did Intel dump NVIDIA in favor of AMD?Well, there are a fewpotentially good reasons. One safebet is that Intel's deal with AMD is more than just a litigatory shield. It's possible that AMD may actually allow Intel to leverage its patents and technologies in its graphics products. Another possible reason isthat, despite the companies' strong rivalries, they actually have a long history of working together.

Evidence of this is abundanton the CPU side where both Intel and AMD have developed many CPU industry standardsover the years that they cross-license between them. They have a long-standingx86-64 cross-licensing agreement and it would make sensethat Intel would want to strike a similar deal on the graphics side.