The two companies signed a 10-year patent-licensing deal, the fourth pact between the companies since 1976. The deal is retroactive to Jan. 1, when the previous agreement expired.
A source familiar with the deal said it is essentially similar to the last one, which calls for Intel to receive royalties from AMD. Intel has patents covering aspects of the x86 instruction set used in processors for Windows-based PCs.
The new deal includes changes to the royalty structure and to AMD's foundry rights, sources said, although neither company would provide further details.
The last deal, which was announced in January 1996, had some more fundamental changes, namely that AMD would no longer have a license to make direct copies of Intel chips beyond the 486 processor and that it would not use the same bus--which connects the processor to other components on the PC motherboard--as Intel's chips.
The current generation of processors--Intel's Pentium 4 and AMD's Athlon--can both run Microsoft Windows, but AMD uses its own chip design and bus. AMD got its start in the Intel-compatible world in 1976, signing a deal to serve as a second source for the 8085 chip.
"We're always happy to license technology in exchange for fair value," said Intel spokesman Chuck Mulloy.
AMD spokesman John Greenagel said his company is pleased with the terms of the deal.
"They will give us the flexibility to execute our plan," he said.