Intel says it is paying AMD, its largest rival in the market for computer processors, $1.25 billion US to settle all antitrust and patent suits.

Intel Corp. says it has agreed to abide by a set of "business practice provisions."

"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 two companies said in a joint statement.

In return, Advanced Micro Devices Inc. is dropping suits in the U.S. and Japan and withdrawing complaints to antitrust regulators worldwide.

Last week, the New York attorney general filed an antitrust lawsuit against Intel, alleging it had been paying kickbacks to computer sellers to ensure they used Intel chips.

The U.S. Federal Trade Commission was expected to follow suit with a separate antitrust lawsuit against the company.

In May, the European Union imposed a record fine of $1.45 billion on Intel for numerous antitrust violations. Intel has appealed that ruling and, up until now, has rejected claims that it had ever acted inappropriately.

With files from The Associated Press