San Francisco  - Intel warned rival chip maker AMD Monday that its license to make personal-computer chips could be revoked because it spun out its manufacturing unit into a separate company.

Intel dominates the market for PC-compatible chips, which are based on the ubiquitous x86 architecture, first introduced by Intel in 1978 and later licensed to other companies.

AMD manufactures the chips under a 2001 patent cross-licensing agreement, and AMD transferred the right to make x86 chips to its manufacturing spinoff GlobalFoundries, which Intel alleges violates terms of the original agreement.

In a statement, Intel said it considers GlobalFoundries a separate company and not a manufacturing subsidiary of AMD. Though AMD has the right to make x86 chips, transferring those rights to a separate company was not part of the patent cross-licensing agreement with Intel, Intel said.

AMD restructured its business in October, when it teamed with Advanced Technology Investment Co to spin off manufacturing operations to GlobalFoundries. ATIC paid AMD 700 million dollars for 65.8 per cent of Global Foundries, while AMD owns 34.2 per cent.

According to PC World magazine, Intel and AMD tried to settle the dispute through negotiations but didn't reach an agreement.

In a filing with the Securities Exchange Commission, AMD rejected Intel's claims, saying: "Intel has no right to terminate the company's rights and licenses" under the agreement.

"Should this matter proceed to litigation, we will prove that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license," AMD said in a statement. dpa