Chip giant Intel (INTC) will pay $1.5 billion to Nvidia (NVDA) as part of a cross licensing deal that brings an end to all of the outstanding legal disputes between the two parties.

Intel will pay Nvidia an aggregate of $1.5 billion in licensing fees payable in five annual installments, beginning Jan. 18, 2011 and will have continued access to Nvidia's full range of patents.

This agreement signals a new era for NVIDIA, said Jen-Hsun Huang, Nvidia's president and chief executive officer. Our cross license with Intel reflects the substantial value of our visual and parallel computing technologies.

On the other hand, Nvidia retains use of Intel's patents, consistent with its existing six-year agreement with Intel that is set to expire on March 31, 2011.

However, the deal excludes Intel's proprietary processors, flash memory and certain chipsets for the Intel platform.

Nvidia will use a portion of the proceeds to settle prior legal claims, which it anticipates to be less than $100 million, will be included in the company's fourth-quarter results.

Nvidia said the settlement would contribute about $233 million of operating profit a year and boost net income by 29 cents a share annually.

In 2009, Intel agreed to pay arch rival AMD $1.25 billion to settle antitrust lawsuits, which triggered regulatory probe around the world, including a massive $1.45 billion antitrust fine in Europe that Intel is still contesting.

Shares of Intel closed Monday's trading session at $20.69, while Nvidia shares ended trading at $20.63.

AMD Intel Lawsuit Electronics