UPDATE 3-Intel agrees to end chip war with rivals

+ Deal applies to CPUs, GPUs, chipsets

+ Company says changes will not be material

+ Intel denies any wrongdoing

+ Market reaction muted

(Revises first sentence, adds analyst comments, updates share prices)

By John Poirier and Kim Dixon

WASHINGTON (Reuters) - Intel Corp, the world's largest chipmaker, has agreed to stop using threats and bundled prices to hamper competition, settling charges that it illegally abused market dominance, the U.S. Federal Trade Commission said Wednesday.

Investors mostly shrugged off the deal, which had been expected, with Intel shares little changed in early afternoon.

"It's not going to have any impact on their microprocessor business because they're so far ahead of their only other real competitor, which is AMD," said Ed Snyder, managing director of Charter Equity Research.

"What it would affect is (sales of) some of their graphics processors and other things that they bundle with the microprocessors," Snyder said.

Urged on by Intel archrival Advanced Micro Devices and the graphics chipmaker Nvidia Corp, the FTC in December accused Intel of illegally using its market dominance to stifle competition.

Nvidia stock was up about 2.5 percent at $9.16 on the Nasdaq, while AMD shares were up 0.7 percent at $7.56 on the New York Stock Exchange.

Intel, which makes 80 percent of the world's microprocessors, also agreed to give makers of complementary products such as graphics chips access to its central processing units for the next six years.

The deal bars Intel from retaliating against computer makers if they do business with non-Intel suppliers.

"It's a landmark settlement that really will have a striking effect on improving competition in the market," said David Balto, a former FTC policy director.

The company, which has denied any wrongdoing, said it did not believe the agreed-to changes in its business practices would have a material impact on its financial results.

"The settlement enables us to put an end to the expense and distraction of the FTC litigation." Doug Melamed, an Intel senior vice president, said in a statement. Intel has been under attack from rival chip makers for years over its aggressive pricing and sales tactics in marketing of the chips that essentially make up the "brains" of of personal computers.

Intel is now barred from offering deals to computer makers in exchange for their promise to buy exclusively from Intel. It is also required to change its intellectual property deals with AMD, Nvidia and Via.

"Because the relief begins right now, we believe we will begin to see a more competitive landscape very soon," said FTC Chairman Jon Leibowitz. In its complaint, the FTC said Intel had been trying to shut out competitors in maneuvers that dated to 1999 -- the same year the agency settled a previous antitrust fight with the company.

Intel has also run afoul of competition regulators elsewhere. The European Commission has fined Intel 1.06 billion euros ($1.4 billion) for illegally shutting out AMD, its much smaller rival in the PC microprocessor market, a decision Intel is appealing. Regulators in South Korea and Japan have also taken action against Intel.

Intel stock was up 0.1 percent at $20.74 on the Nasdaq, after falling as much as 2 percent earlier in the session.

$1 - 0.7597 euro (Reporting by John Poirier and Kim Dixon; Additional reporting by Alex Dobuzinskis in Las Angeles; editing by John Wallace and Matthew Lewis)

REUTERS