In a surprising move by Intel, the silicon giant filed a lawsuit against NVIDIA corporation at the Court of Chancery in the State of Delaware, over the chipset licensing agreement between the two companies, that allows NVIDIA to make core-logic (chipset) for Intel microprocessors. Intel's contention states that the licensing agreement signed between the two companies about four years ago, that allowed NVIDIA to make nForce series chipset supporting Intel processors, does not cover the the privileges required by NVIDIA to prepare chipsets for Intel's new generation of processors that feature integrated memory controllers.

As of now, NVIDIA does not stand at the receiving end of any legal action, since the company has no chipset products either released, or in production, that supports Intel's Core i7 series processors. The legal-spat in the making, between the two companies, may however affect NVIDIA's possible plans to develop chipset products for Intel's new 45 nm and 32 nm processors. NVIDIA on its part, defends its position, dismissing Intel's claims. Jen-Hsun Huang, NVIDIA's president and CEO maintained that the license agreement negotiated earlier would still apply, though he did not miss the opportunity to affirm his beliefs that the focus on CPU being the soul (if not the heart) of the PC, is slowly yet surely shifting towards the GPU. "This is clearly an attempt to stifle innovation to protect a decaying CPU business" he said. According to the NVIDIA CEO, it is obvious that Intel fears the competition NVIDIA poses with its platform core-logic innovations, that it had to file the complaint. This spat between the two major computer hardware companies could get uglier in the days to come. The press-release from NVIDIA in response to Intel's charges follows:

NVIDIA Responds To INTEL Court Filing

NVIDIA Corporation today responded to a Monday court filing (Court of Chancery in the State of Delaware) 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.

"We are confident that our license, as negotiated, applies," said Jen-Hsun Huang, president and CEO of NVIDIA. "At the heart of this issue is that the CPU has run its course and the soul of the PC is shifting quickly to the GPU. This is clearly an attempt to stifle innovation to protect a decaying CPU business."

NVIDIA entered into the agreement in 2004 in order to bring platform innovations to Intel CPU based systems. In return, Intel took a license to NVIDIA's rich portfolio of 3D, GPU, and other computing patents.

Since signing the agreement, NVIDIA has offered innovations such as SLI, Hybrid power, and CUDA parallel processing. ION, the most recent innovation, integrates a powerful NVIDIA GPU, north bridge and south bridge into one compact die. When combined with a CPU, ION enables a two-chip PC architecture for Intel processors two years ahead of Intel's own solution. In addition, the ION platform offers 10x the performance of Intel's current three chip design.

The industry and consumers now count on innovations from NVIDIA. Microsoft recently endorsed ION because it offers consumers the first truly affordable premium Windows experience. Late last year Apple selected NVIDIA's chipset for its entire new line of notebooks including the MacBook Classic, MacBook Air, MacBook and MacBook Pro. Today, companies like Acer, Alienware, Asus, Dell, Falcon Northwest, Fujitsu, Gigabyte, HP, Lenovo, MSI, NEC, and Toshiba all ship exciting innovations created by NVIDIA as a result of its agreement with Intel.

Huang said that, given the broad and growing adoption of NVIDIA's platform innovations, it is not surprising that Intel is now initiating a dispute over a contract signed four years ago. Innovations like ION, SLI, Hybrid power, and CUDA threaten Intel's ability to control the PC platform.

NVIDIA has been attempting to resolve the disagreement with Intel in a fair and reasonable manner for over a year. NVIDIA's chipsets for Intel's current CPU bus interface are not affected by the dispute.