Xilinx and Altera settle patent battle

Xilinx and Altera, the Hatfields and McCoys of the programmable-computer-chip industry, put away their shotguns Wednesday.

Altera will pay Xilinx $20 million to settle six patent lawsuits between the two San Jose companies. As part of the deal, the companies also signed a royalty-free cross-licensing agreement and pledged not to file any more patent suits against each other for five years.

Altera and Xilinx did not disclose other terms.

The rivals together claim more than 70 percent of the market for programmable logic chips, which are used in a variety of communications equipment.

The agreement resolves a colorful, costly battle that had boiled underneath a veneer of civility for nearly a decade.

Altera Chief Executive Officer John Daane, a former LSI Logic executive who joined the company in November, said last month that he hoped to settle the litigation.

Wednesday, Xilinx CEO Wim Roelandts said, ``It's time for both companies to bury the hatchet and declare a meaningful patent peace that is in the best interest of our customers, shareholders, partners and employees. This agreement enables both companies to focus their energies on technological innovation and the competition that matters most -- in the marketplace.''

The companies released word of the settlement after regular stock-market trading ended Wednesday. In regular trading, Altera shares fell $1.39 to $29.25 and Xilinx fell $1.20 to $39.42. Shares of both companies were up slightly in after-hours trading.