“We’re extremely pleased to have Doug join the Intel team,” said Intel CEO Paul Otellini. “His breadth of experience and legal expertise combined with his background in government are an outstanding fit for us.”

Melamed’s appointment must be quite a relief for Otellini and Intel, which, as I’ve noted here before, is grappling with some of the most important legal issues the company has ever faced.

Good day everyone … and thank you for joining us. For the past few years, we have been very open in outlining the major steps for AMD’s transformation into a processing powerhouse:

• From the acquisition of ATI Technologies;
• To the formation of GLOBALFOUNDRIES; and
• The creation of AMD-The Product Company,
  o with a single business unit,
  o a reinvigorated roadmap,
  o a new business model,
  o And a close relationship with a world-class leading-
  edge foundry.

Today, I am pleased to announce the last major component of that transformation–in the form of a transparent and public agreement with Intel to create a level playing field in the x86 processor industry–taking us one big step closer to achieving our bold vision.
There are three key components to the agreement:

• First, Intel has agreed to an important set of ground rules that we hope will define the path to a free and open market in the microprocessor industry;
• Second, we have agreed to a new patent cross-license agreement that gives AMD broad rights and the freedom to operate a business utilizing multiple foundries,
• And third, GLOBALFOUNDRIES has agreed to terms that allow them the freedom to operate as an independent world-class leading-edge foundry company, going forward, without being a subsidiary of AMD.

In addition, Intel has agreed to pay AMD $1.25 billion.

Today marks the beginning of a new era… one that confirms that the game has changed for AMD. It is an important milestone for us, for our customers, our partners, and most important–for consumers and businesses worldwide. In addition, it represents the culmination many years of litigation and regulatory engagement.

And we are optimistic that it will usher a new era for our industry. We recognize that it will take time for people to understand how operating conditions in the processor business have changed–but make no mistake–they have changed.

I would like to thank the regulatory agencies around the world for their diligence and consistency. Their work has enabled us to achieve this milestone. We are optimistic they will continue their vigilance in maintaining a level playing field, especially with respect to exclusionary practices in our industry.

Looking forward to three keys to our continued success: Compelling offerings; Access to customers and channels, And a winning business model.

We are optimistic this agreement addresses concerns about customer and channel access and our business model. We look forward to healthy competition with the mutual respect one would expect between world-class competitors.

Under terms of the agreement, Intel (INTC) will pay AMD (AMD) $1.25 billion (nearly a quarter of AMD’s $4.46 billion market cap) and agree to “abide by a set of business practice provisions” presumably crafted to temper Intel’s allegedly anticompetitive practices. Here are details of the agreement:

Business Practices Provisions Prohibit Intel From:

• Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis (Section 2.1.1.a)
• Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis (Section 2.1.1.b)
• Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis (Section 2.1.2a-b)
• Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities (Section 2.1.2.b)
• Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.2 and 2.1.2)
• Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.1)
• Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In return, AMD will drop all its pending litigation against the company and pull out of regulatory complaints worldwide. Finally, the two rivals will enter into a five-year patent cross-licensing agreement.

In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

Interesting. Clearly, AMD CEO Dirk Meyer’s earlier comments about the ratification of its complaints about Intel’s business practices and the company’s hope for a future in which AMD’s “ability to succeed as a business is really determined by the quality of our products and customer relationships” was quite prefigurative.

During a call to discuss the settlement, Meyer said the accord marks the beginning of a new era, one that changes the game for AMD. “It is an important milestone for us, for our customers, our partners, and most importantly–for consumers and businesses worldwide,” Meyer said.

“It is the culmination years of litigation and regulatory engagement, and we are optimistic that it will usher a new era for our industry,” the CEO continued, further noting that change may not be immediate. “We recognize that it will take time for people to understand how the operating conditions in processor business have changed–but make no mistake–they have changed….We look forward to healthy competition with the mutual respect one would expect between world-class competitors.”

It is unclear if the settlement will affect the antitrust suit brought against Intel by New York Attorney General Andrew Cuomo last week as Cuomo hasn’t yet commented. But the European Union says it will not change its decision in May to fine Intel a record $1.5 billion for anticompetitive behavior.

“The European Commission takes note that Intel and AMD have settled all their litigation and that Intel is paying AMD compensation of one-and-quarter billion dollars,” said an EC spokesman. “But Intel has an ongoing obligation to comply with the commission’s antitrust decision and with EU competition law. The commission continues to vigorously monitor Intel’s compliance with its obligations under the EU antitrust decision.”

In remarks made during AMD Financial Analyst Day, CEO Dirk Meyer said that Intel’s (INTC) current legal woes “ratify” AMD’s (AMD) allegations.

“We’ve said for a long time that our success in the marketplace was hampered by anticompetitive behavior on the part of Intel,” Meyer said. “And over the last 12 months that we’ve seen our statements ratified by regulators around the world….I’m looking forward to a future in which our ability to succeed as a business is really determined by the quality of our products and customer relationships. And I can tell you that hasn’t always been true.”

Welcome news, considering that back in June, SIA was calling for chip sales to fall 21 percent.

“The new forecast is brighter than our earlier projections, reflecting an improving global economy,” SIA President George Scalise said in a statement. “Unit sales of key demand drivers–including PCs and cell phones, which together account for about 60% of semiconductor demand–have been stronger than previously predicted. We remain cautiously optimistic for the longer term. The current forecast is closely tied to projections of continuing improvement in the worldwide economy.”

“After Gateway’s 2004 merger with eMachines, AMD attempted to revive the relationship it had enjoyed with Gateway until 2001, but experienced extremely limited success. While Gateway built one AMD-powered desktop model at the request of Circuit City, AMD remains locked out entirely of Gateway’s direct internet sales, its commercial offerings and its server line. According to Gateway executives, their Company has paid a high price for even its limited AMD dealings. They claim that Intel has beaten them into ‘guacamole’ in retaliation.”

– Excerpt from AMD’s 2005 complaint against Intel

Looks like it’s going to be a very busy fall for Intel legal. This morning, New York Attorney General Andrew Cuomo filed a federal antitrust lawsuit against the company, alleging that it violated state and federal laws with a “systematic campaign” of illegal conduct to maintain its monopoly.

At issue here, once again, is Intel’s alleged practice of using bribery and coercion to maintain its monopoly, something rival AMD complained about in its own antitrust suit against Intel (INTC) in 2005.

AMD (AMD) alleged, for example, that in 2000, Michael Capellas, then chief executive of Compaq Computer, told AMD that because of Compaq’s relationship with AMD, Intel withheld the delivery of some microprocessors he needed for servers. Capellas told AMD he would stop buying from it, saying he “had a gun to his head.”

Further, in 2004, Gateway officials are alleged to have told AMD that Intel “beat them into guacamole” in retaliation for their limited dealings with its rival. These are but two incidents in a list that includes similar alleged acts of coercion by Intel involving 38 other computer makers, distributors and retailers.

Apparently, Cuomo has found evidence of similar behavior. “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” Cuomo said in a statement. “Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”

Third-quarter chip sales totaled $61.9 billion, down 10.1 percent from the same quarter last year, but up nearly 20 percent from the second quarter of 2009. No doubt about it, the market for chips is improving (see chart below; click to enlarge).

“Global semiconductor sales in the third quarter were above expectations,” SIA President George Scalise said in a statement. “September sales were in line with historical patterns, reflecting increased demand from end-users as they began the build for the holiday season.”

“Amid signs that we are in the early stages of recovery in the global economy,” Scalise added, “semiconductor sales continue to reflect normal seasonal patterns. Sales are running well ahead of the worst-case scenarios projected early in the year, and we are optimistic that total sales for 2009 will be better than our mid-year forecast.”

Sales are running well ahead of the worst-case scenarios? Well, I suppose any reassurance is a good one when your industry is down 10 percent year-over-year.

Analysts had expected AMD to lose 42 cents a share on revenue of $1.26 billion, according to a consensus survey by Thomson Reuters. Instead, the company lost 18 cents a share on revenue of $1.4 billion, which was down from $1.8 billion for the same quarter last year.

Not the sort of blow-out quarter we saw from Intel (INTC) earlier this week, but encouraging news nonetheless. Certainly, AMD’s leadership believes the company is poised for a turnaround. During a conference call to discuss AMD’s (AMD) third-quarter results, CEO Dirk Meyer offered an upbeat outlook for the remainder of 2009 despite the current loss.

“Third quarter consumer PC demand continued to improve from prior periods, with particular strength in notebooks and in China and continued recovery in Europe and in North America,” Meyer said. “And it appears the commercial IT markets are positioned to improve next year….Going forward, we believe we are well positioned to succeed.”

Posting third-quarter results Tuesday, Intel (INTC) said it earned 35 cents a share on revenue of $9.39 billion. That’s not quite what the company reported during the same period last year, when it saw earnings of 35 cents a share on revenue of $10.2 billion. But it’s much better than investors had been hoping for. Analysts had expected Intel to report earnings of 28 cents a share on revenue of $9 billion, according to a consensus survey by FactSet Research.

Not bad. Even better, the company bumped up its fourth-quarter guidance from sales of $9.7 billion to sales $10.6 billion. Consensus estimates have been calling for sales of $9.5 billion, according to FactSet Research data.

Intel’s rosier Q4 guidance suggests that the slow increase in end-market demand for PCs we’ve been seeing lately isn’t simply inventory refill but reflects an upswing in demand for end-customer goods. Perhaps that turnaround CEO Paul Otellini has been heralding for the last half year is not as far off as it might seem.

“Intel’s strong third-quarter results underscore that computing is essential to people’s lives, proving the importance of technology innovation in leading an economic recovery,” Intel CEO Paul Otellini said in an earnings release. “This momentum in the current economic climate, plus our product leadership, gives us confidence about our business prospects going forward.”

“Notwithstanding the slow recovery of demand from the enterprise sector, we are encouraged that industry momentum has turned positive following the steepest downturn in more than a decade,” said SIA President George Scalise.

Great news were it not for the fact that at $19.1 billion, August sales were down a horrific 16.1 percent year-over-year. Furthermore, for the first eight months of 2009, sales are at $133.8 billion–about 21.3 percent below this time last year.

So while it’s wonderful that we’re seeing these sequential improvements, it’s important to remember that the industry is still fairly deep in the abyss and has a long way to go before it climbs out.

“The worst is now behind us.”

– Intel CEO Paul Otellini, April 14, 2009

Looks like the worst is once again behind us. In remarks at the Intel Developer Forum on Tuesday, Intel (INTC) CEO Paul Otellini said the PC industry is headed for recovery, albeit slowly. Evidently, chip shipments are stablizing as PC shipments begin to pick up.

“This is an environment where we have had the worst recession in 70 years,” Otellini said. “The market is poised for a resurgence and we will see how 2010 plays out.”

And what, exactly, does that mean? Otellini says that he “personally” is betting that the PC industry sales volume will at least match what we saw in 2008. They’ll wind up “flat to slightly up,” he said.

That’s how Intel describes the record $1.45 billion antitrust fine levied against it by the European Union, one the company evidently believes was meted out in error.

In an appeal filed with the European Court of First Instance, Intel asks that the European Commission’s antitrust ruling against it be annulled on the grounds that the EC failed “to meet the required standard of proof.”

Seems the chip giant feels the Commission’s analysis of its discounts and rebate programs was too shoddy to be trusted–especially when it’s being used as justification for the largest single penalty imposed on a company for antitrust breaches in Europe.

“The Commission fails to prove that Intel engaged in a long-term strategy to foreclose the competitors,” Intel (INTC) argues in its appeal. “Such a finding is not supported by the evidence and is impossible to reconcile with the fragmented nature of the Commission’s allegations (in relation to both products covered and time period) in respect of each Intel customer….The applicant also submits that all or part of the Decision should be annulled on the basis that the Commission infringed essential procedural requirements during the administrative procedure, which materially infringed Intel’s rights of defence.”

Clearly, former Intel general counsel Bruce Sewell, who left the company to take a job with Apple (AAPL) Tuesday, was busy right up until the time he packed up his desk.

Anyway, Intel asks the court to annul “whole or in part” the EC’s ruling and, barring that, to at least annul or reduce the fine imposed. Finally, it would also like to see the EC ordered to pay its legal expenses.

The latest, from China Economic News, claims the device is being prepped for a February debut at a price somewhere between $799 and $999. Supply chain sources tell the publication the tablet will be built around a 9.6-inch Wintek capacitive touch panel and a mystery processor engineered by P.A. Semi, the boutique semiconductor design company Apple acquired in 2008. DynaPack International Technology will supply batteries, which are said to be “long lasting.”

Finally, the Apple (AAPL) device is said to support the high-speed downlink packet access 3G protocol. Interesting, since this likely means the tablet is destined for AT&T’s (T) network, not Verizon’s (VZ), as had been previously rumored, and lends credence to predictions that Apple will extend AT&T’s iPhone exclusivity deal rather than allow it to lapse.

Which is interesting since Sewell has been quarterbacking Intel’s (INTC) fight against antitrust allegations at home and abroad since, well, since they were first brought against the company in Japan. And Korea. And the United States, and now the European Union as well.

So to hear he’s leaving today after 14 years with the company with no explanation of why or where he’s headed…

to hear there’s no one lined up to take his place (Suzan Miller, currently deputy general counsel, will become interim general counsel until a replacement is found)…

and to hear this at a time when the company is grappling with some of the most important legal issues it’s ever faced…

when the U.S. Federal Trade Commission and the European Commission are both probing Intel’s alleged antitrust violations in the microprocessor market…

when the company is just six months away from going to trial with rival chip maker AMD (AMD), which accuses Intel of using illegal inducements to dissuade OEMs from buying AMD processors and “knee-capping” those who did….

Well, it’s all a bit odd, isn’t it?

I mean Sewell’s Intel bio is already returning “Page Not Found” errors (see below; click image to enlarge).

What’s going on in Intel legal? Reached for comment, the company didn’t have much of an answer to the question other than to say that Sewell is leaving of his own accord and it’s sad to see him go. “All I can say is that Bruce has decided voluntarily to leave the company,” Intel spokesman Chuck Molloy told me. “We are not talking about his plans. He was not forced to leave and we were surprised by his decision.”

UPDATE: Sewell’s leaving Intel to become General Counsel at Apple.