NVIDIA could put a halt to Larrabee

The mud-fight inbetween NVIDIA and Intel repositions today. Nvidia claims that Intel uses Nvidia’s Intellectual Property (IP) in currently shipping Integrated Graphics Processors (IGP) as a part of the cross licensing agreement with Intel.

Nvidia also believes that Intel’s upcoming discrete Graphics Processing Unit (GPU), codenamed Larrabee would not be possible without the use of Nvidia’s IP. If Nvidia terminates its cross-licensing agreement with Intel, it could stop the Larrabee from entering the market. This was pointed out by Nvidia’s Drew Henry, general manager of MCP business in an interview with the website Digitimes.

Digitimes: Nvidia has officially filed a counter suit with the Court of Chancery in the State of Delaware against Intel for breach of contract. In the suit, Nvidia accused Intel of making an opportunistic bid to redefine the terms of their 2004 cross-licensing agreement in order to make it impossible for Nvidia to make any kind of chipset covered by the license, while “conveniently” preserving Intel’s access to Nvidia’s IP portfolio.

By publicly announcing that Nvidia is not licensed to sell chipsets for next generation Nehalem CPUs, Intel has caused alarm among Nvidia’s customers, which is having an impact on sales, even for chipsets that are not under dispute, said Nvidia in the suit.

Nvidia’s Drew Henry, general manager of MCP business, described the situation as a headwind that is making it hard to sell its products to motherboard and notebook makers/vendors. While there is doubt over Nvidia’s long-term roadmap, customers may reasonably ask themselves if it is worthwhile continuing to invest in Nvidia chipset-based products.

Henry said that the overall effect of this could be that customers eventually end up switching to entirely Intel-based product lineups, depriving consumers of choice in the market.

Meanwhile, Henry pointed out that Intel continues to benefit from its side of the cross-licensing agreement. Nvidia believes that Intel is using Nvidia IP in currently shipping IGP products and the company also believes that Intel would not be able to develop its Larrabee graphics chips without making use of Nvidia’s IP portfolio, said Henry. Henry went on to say that, Nvidia may ask the courts to terminate Intel’s rights to these IPs in the event that it is found that Intel is in breech of contract.

Henry went on to stress that Nvidia did not want to bring this case to the courts, but was forced to do so after Intel suddenly filed its original suit in February. Both companies have acknowledged that they have been working for over a year to resolve the dispute privately, and later through arbitration. Nvidia has previously stated that it believes the success of its Ion platform (which Henry today interestingly defined as any of Nvidia’s MCP79- and MCP78-based chipsets for Intel CPU-series including Atom, Celeron and Core 2 – Ion originally only referred to chipsets designed for Atom CPUs for nettops and netbooks) was the main cause behind Intel filing the suit.

Finally, when asked what Nvidia’s backup plan is if the courts decide it does not have rights to produce chipsets for Intel CPUs with integrated memory controllers, Henry said Nvidia would figure out ways to bring other products to the market place, such as the already discussed Ion 2 platform for VIA Technologies’ CPUs.