Intel has announced that it has filed suit against NVIDIA over whether or not the GPU and chipset designer has the rights to build solutions for Nehalem-based CPUs. According to Intel, the current agreement between the two companies only covers processors that do not contain an integrated memory controller .

The argument between the two companies centers on whether or not NVIDIA has the right to produce chipsets for Nehalem-class microprocessors. Intel has requested summary judgement in a filing with the Court of Chancery in the state of Delaware and issued a statement saying, "Intel has filed suit against Nvidia seeking a declaratory judgment over rights associated with two agreements between the companies. The suit seeks to have the court declare that Nvidia is not licensed to produce chipsets that are compatible with any Intel processor that has integrated memory controller functionality, such as Intel’s Nehalem microprocessors and that Nvidia has breached the agreement with Intel by falsely claiming that it is licensed. Intel has been in discussions with Nvidia for more than a year attempting to resolve the matter but unfortunately, we were unsuccessful. As a result Intel is asking the court to resolve this dispute." [Emphasis added.]

I emphasized the bit about integrated memory controller technology because it seems an odd point for Intel to stand on. When Intel took VIA to court over similar licensing issues ten years ago, the company claimed that the Pentium 4 bus was a proprietary, Intel-developed technology that VIA had infringed upon and refused to license appropriately.

The modern equivalent, as far as I can tell, would be for Intel to claim NVIDIA has no license to produce motherboards utilizing Intel's QuickPath Interconnect (QPI). It may be that Intel is essentially alleging this and simply chose to word the claim differently, but if NVIDIA isn't infringing upon QPI, what's the actual point of infringement—the CPU socket? Based on what we know thus far, it's not clear.

NVIDIA spokesperson Ujesh Desai told Bit-Tech that NVIDIA will defend itself, and it has been working with Intel for over a year to reach an amicable solution to the licensing issue. However, at the core of the issue, NVIDIA feels that its license agreement does allow it to build chipsets for Nehalem and future Intel processors that feature an integrated memory controller.

Desai goes on to say that NVIDIA will not change its future roadmap and will continue to work on the development of chipsets for the Intel processors in question. This potential litigation will not affect any of the company's shipping products and should not delay Ion's trip to market later this year.

NVIDIA can bang its drum all it likes, but the company is making a tremendous mistake if it ignores what happened to the last company to cross Intel on the subject of chipset licensing.

NVIDIA has issued an official statement on the Intel suit saying in part, "NVIDIA responded to a court filing in which Intel alleged that the four-year-old chipset license agreement the companies signed does not extend to Intel’s future generation CPUs with 'integrated' memory controllers, such as Nehalem. The filing does not impact NVIDIA chipsets that are currently being shipped. Intel is trying to delay the inevitable value shift from the CPU to the GPU. NVIDIA believes that our bus license with Intel clearly enables us to build chipsets for Intel CPUs with integrated memory controllers. We are aggressively developing new products for Intel’s current front side bus (MCP79 and MCP89) and for Intel’s future bus, DMI."

The world's largest GPU maker states that the suit is a clear attempt by Intel to slow the adoption of NVIDIA platforms to protect a decaying CPU business as evidenced by the rapid shift of the market to Intel's lowest priced processor, the Intel Atom.

NVIDIA can bang its drum all it likes, but the company is making a tremendous mistake if it ignores what happened to the last company to cross Intel on the subject of chipset licensing. As I previously mentioned, erstwhile chipset designer VIA Technologies once took such a tack and lost, badly.

In 2000 and 2001, VIA claimed it did not need a bus license to build P4-compatible motherboards. At the time, the Taiwanese company was a very real force in the chipset industry; the Apollo Pro 133 (and its related brethren) had stolen a wide swath of the Pentium 3 market beginning in 1999, the KX133 and KT133 chipsets had both been very successful platforms for the original K7 and its Thunderbird refresh, and the Apollo MVP3/MVP4 series had become the dominant solutions for the still-sizable Socket 7/Super Socket 7 market.

When Intel announced that all third-party chipset vendors would need to license the Pentium 4's bus technology, VIA arrogantly refused, and the rest is history (along with the company's entire motherboard business). Whatever motherboard OEM support VIA thought it had based on dark alley deals and off-the-record conversations evaporated in the harsh light of day once Intel ramped up its legal pressure; cutting-edge VIA P4 DDR motherboards vanished off store shelves faster than a $49 Wii special at your local Wal-Mart.

If Intel and NVIDIA can't reach an amicable solution, the smaller chipset vendor could find itself unable to provide a full range of solutions for Apple products. To date, all of the new Apple portables unveiled since the initial design win announcement back in October have been powered by NVIDIA chipsets and GPUs. That's a feather NVIDIA won't want to lose, particularly given the company's weak financial performance and dour outlook for calendar year 2009.