Intel and Nvidia headed for licensing stand-off

This started out as a rumor today, but Intel has since more-or-less confirmed that licensing discussions between Intel and Nvidia for Intel's next-generation processors are not going well and the resulting conflict could have implications for high-end gaming PCs.

The story is that Intel and Nvidia are currently negotiating technology licenses for Nehalem, Intel's next-generation desktop CPU due out at the end of this year. As we were told from multiple desktop vendors who wish to remain nameless, Intel wants to license SLI from Nvidia for its Nehalem chipsets, and if Nvidia won't, Intel will withhold the license that would enable Nvidia to support Nehalem's memory controller, and thus Nehalem, on its own chipsets.

We have no official confirmation from Nvidia on this, and Intel's statement from PR manager Dan Snyder is vague, but it lends credence to the story:

"There is a disagreement between Intel and Nvidia as to the scope of Nvidia's license from Intel to make chipsets compatible with Intel microprocessors. Intel is trying to resolve the disagreement privately with Nvidia and therefore we will not provide additional details. It is our hope that this dispute will be resolved amicably and that it will not impact other areas of our companies' working relationship."

Intel has been after SLI support for its chipsets for years, but has thus far only been able to build it into its ultra high-end Skulltrail motherboards, seemingly a one-off. With SLI available across all of its chipset lines, Intel would be able to sell motherboards that support both AMD's and Nvidia's multigraphics card technologies. Right now Intel boards (with the exception of Skulltrail) only support AMD's CrossFire.

Nvidia, on the other hand, has kept SLI close, often citing compatibility and certification concerns as the reason why no other chipset vendor has been able to offer SLI-capability. But if Nvidia loses out on Nehalem for its next-generation chipsets, the high-end desktop market will become more fragmented than it's been in years. Nvidia has been able to offer SLI-supporting chipsets for both AMD and Intel processors, but if this split happens, on one side we'll have Nehalem and CrossFire-based systems, the other will offer SLI (and possibly CrossFire, if hacks used in the past continue to work) and AMD CPUs.

In light of this rumor, Nvidia's recent marketing push encouraging upgraders to pick a graphics card before a quad-core CPU takes on new significance. If Nvidia knows high-end PC gamers will have to make a choice later this year, better to plant the seeds in its favor early. Intel probably has less to worry about, because gamers who demand SLI with a fast Intel processor can still use Nvidia's NForce 790i chipset, which supports the current generation of Intel Core 2 Extreme chips.

UPDATE 5:48pm PT - Intel released an additional statement after this blog was posted. "We are not seeking any SLI concession from Nvidia in exchange for granting any Nehalem license rights to Nvidia," the company said.

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