Intel Corp. will pay Advanced Micro Devices $1.25 billion as part of a comprehensive settlement to the companies' antitrust and intellectual-property litigation, the companies announced Thursday.

Under terms of the agreement, the two microprocessor manufacturers obtain patent rights from a new five-year cross-license agreement. Intel and AMD will drop claims of breach from the previous license agreement, and Intel will pay AMD $1.25 billion. Intel has also agreed to abide by a set of business-practice provisions.

AMD, in return, will drop all pending litigation, including the case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw its regulatory complaints worldwide.

"While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development," the companies said in a joint statement.

The agreement will be made public in filings with the Securities and Exchange Commission.