2024-03-27 18:13:21
Last year, Germany officially became part of the club of producing countries Intel – which decided to bet on the European country as its main production area on the continent with a new and strategic plant to be built outside of Berlin.
● Biomed investors came to Israel to declare: we are open for business, despite the situation
● A giant Chinese laboratory being built underground will be the first to try to crack one of the mysteries of the universe
This is supposed to be the flagship plant of the American company in Europe, one that will produce with the most advanced technology available to it and will serve the “durability” strategy of CEO Pat Gelsinger, who is trying to market to the chip giants a global production setup that is not very exposed to risks in one specific region across the globe.
The shutdown of production lines following the closures of the Corona and the tensions surrounding the island of Taiwan, which produces most of the advanced chips in the world – threaten the entire industry, and strong factories in Europe, as well as in the US and Central America, may be the answer to this.
In Europe as a whole, Intel plans to invest $86 billion in the coming decade – in addition to the factory in Germany, at a cost of $18 billion, a factory in Ireland will be upgraded at a cost of $13 billion, and chip development, assembly and packaging centers in Poland and Italy at a cost of $36 billion over the next few years.
However, a lawsuit that a small chip company in Germany is conducting against Intel, may sabotage the plans of the giant in the entire continent. A German court earlier this month granted the small chip company R2 Semiconductor’s request to issue a temporary restraining order against the sale of some of Intel’s chip series for personal computers and servers.
The patent in dispute
According to the company, which is actually located in California, Intel, along with other computer manufacturers such as Dell and HPE, violated its patent, which deals with managing electrical loads inside the chip. According to her, these chips are also embedded in the Japanese Fujitsu servers sold to Amazon and help to run its popular cloud service, AWS.
A higher legal court in Germany even upheld the previous decision for a while and determined that the restraining order would not be canceled as Intel demanded. Meanwhile, Intel claims in a report to the stock exchange that the patent in dispute is not related to its advanced chips – but this claim is denied by the plaintiff company. Investors, meanwhile, were not very impressed by the decision and do not foresee a catastrophe: the company’s stock fell in the last month by only 2%.
R2 does not operate alone against the global chip giant, which generates revenues of approximately 54 billion dollars a year. Behind it is the venture capital fund Third Point of the investor Daniel Loeb. The fund invested in the small startup already 15 years ago and according to the estimate owns 75% of its shares. According to the estimate, it is financing the lawsuit against Intel with tens of millions of dollars, and in addition deposited 79 million dollars in a special account dedicated to legal guarantee for the company.
Intel, for its part, called R2 a “straw company” whose entire goal is to create lawsuits, and pointed out that a very similar trial held in the US ended with a judge ruling in its favor and canceling the plaintiff’s claim.
Loeb told the New York Times that “you’re not really a successful patent troll if you spend 15 years of your life developing intellectual property, giving up weekends, and working all-nighters to develop something you hope will be stolen, only to claim it back.” Intel told Globes that “we are disappointed by the decision of the regional court in Dusseldorf, after which we filed a petition.”
In Germany they tend to leave injunctions in effect even during the appeal process, so according to estimates Intel will not be able to sell its chips in the country at least until the end of the year. If R2 wins Intel’s appeal, the injunction will not be lifted before 2030.
Regardless of the lawsuit, Intel’s development plans have slowed since the original announcement of an initial investment of 30 billion euros in Europe about two years ago. The establishment of the plant in Italy and the development center in France have been suspended until further notice according to the local media. The plant in Germany is also slightly delayed – precisely because of an archaeological dig at the site.
Exit strategy
“R2 is waging a fight on several continents – after not being successful in the US, it seems that in Europe it is trying to exert pressure in several countries at the same time,” attorney and patent attorney Yoav Alkalai, a partner at the Pearl Cohen firm specializing in intellectual property, tells Globes.
“I would not yet tie crowns to this lawsuit, but the injunction obtained in Germany is a dramatic move. Even if Intel succeeds in canceling it, there is already a legal process for patent infringement in the UK, and later it can continue to exhaust Intel with lawsuits in about 40 other European countries “. This means that any such lawsuit may delay Intel’s sales on the continent. Intel does not publish its revenues from Europe, but they are estimated at less than 10 billion dollars.
“The potential damage to Intel and, on the other hand, the profit to R2 is very significant, and could even reach hundreds of millions of dollars – as evidence, the Third Point fund announced that if you get to speak, it could have a very positive effect on its performance,” says Alkalai. “However, my cautious assessment is that this will end in a compromise, and perhaps even a purchase, as most patent lawsuits end.”
According to him, it is rare for venture capital funds or hedge funds to come to the aid of their portfolio companies with legal financing of tens of millions of dollars – a move that is usually typical of funds specializing in legal litigation operating in a narrow niche. “Sometimes patent disputes are a tool for lowering prices, improving conditions and eventually even an exit,” he says.
Damage to the commercial capacity
“There is no doubt that getting an injunction in a significant territory like Germany provides a windfall for R2’s move, but there is a long way from here until the company sees compensation from this,” attorney and general counsel Ziv Glasberg of the patent firm Glasberg Applebaum, which also represents chip companies, tells Globes .
He estimates that even if a compromise is accepted, “it will not fall below several tens of millions of dollars, and as soon as Intel is prevented from selling processors and producing processors in Germany, this can greatly harm its commercial ability, as well as its customers. The fact that they were able to obtain an injunction at the first instance in Germany indicates that the patent is valid and they are in a good legal situation for them.”
Is there a danger to Intel’s other investments in Europe as well?
Glasberg: “The things are related, because once there are many previous investments that Intel has already made that are affected by this trial, this adds to the high economic significance of the case. Therefore, if at the end of the day Intel’s appeals are unsuccessful, it will look for new ways to act: through a compromise, through changing the license Or through what is called ‘design around’, i.e. developing the product ‘around’ the patent in a way that will not infringe it.
“It is possible but it may take time. There is no doubt that the injunction is a big stick in Intel’s wheels in Germany, and that this may be an indication for other countries in Europe.”
For your attention: The Globes system strives for a diverse, relevant and respectful discourse in accordance with the code of ethics that appears in the trust report according to which we operate. Expressions of violence, racism, incitement or any other inappropriate discourse are filtered out automatically and will not be published on the site.
#Intel #planned #invest #billion #dollars #Europe #problem