Intel and Advanced Micro Devices (AMD) have said the two companies will settle all legal disputes, including antitrust litigation, for $1.25 billion.
Chip maker Intel has "also agreed to abide by a set of business practice provisions". In return, AMD will drop all pending litigation including the case in US District Court in Delaware and two cases pending in Japan.
Under terms of the settlement, AMD and Intel will have a new five-year cross licence agreement.
Intel and AMD will give up any claims of breach from the previous licence agreement and Intel will pay AMD $1.25 billion.
In a joint statement the two companies commented: "While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development."
The agreement will be made public in filings with the Securities and Exchange Commission.