US chip maker Intel has agreed to pay rival AMD $1.25bn as part of a deal to settle all outstanding legal disputes between the two companies.
The two firms said the settlement covered all anti-trust litigation and patent disputes.
"While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes," the two firms said.
AMD’s shares jumped by as much as 23% following the announcement.
Under the terms of the deal, the two firms have agreed a five-year cross licensing agreement, with each agreeing to give up claims of breaching previous agreements.
AMD’s chief executive, Dirk Meyer, said the deal created a more level playing field and the company was now "one big step closer to achieving our bold vision".
Competition regulators in Asia, Europe and the US have all taken action against Intel because of complaints by AMD.
Europe’s competition spokesman, Jonathan Todd, said he had taken note of the settlement, but that it did not change Intel’s duty to comply with European competition law.
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