Post by mikeroq on Jun 28, 2005 7:50:25 GMT -8
NEW YORK - Chipmaker Advanced Micro Devices launched a new legal offensive against rival Intel this morning, filing an antitrust lawsuit in a federal court in Delaware.
The 48-page complaint accuses Intel (nasdaq: INTC - news - people ) of illegally coercing 38 companies--computer makers like Compaq, now a unit of Hewlett-Packard (nyse: HPQ - news - people ), Gateway (nyse: GTW - news - people ), Acer, Fujitsu and NEC--in order to preserve its position in the market for PC microprocessors.
AMD (nyse: AMD - news - people ) is accusing Intel of a "pervasive, global scheme to coerce Intel customers from freely dealing with AMD to the detriment of customers and consumers worldwide."
The suit alleges that Intel forces such computer makers as Dell (nasdaq: DELL - news - people ), Sony (nyse: SNE - news - people ), Toshiba and Hitachi (nyse: HIT - news - people ) into exclusively using Intel in return for cash payments. It further alleges discriminatory pricing and marketing subsidies designed to punish companies who use AMD chips in part of their product line.
The complaint also charges that Intel paid huge sums of money to Dell and Toshiba for remaining Intel-only PC makers. Dell in particular has been very public about its ongoing preference for Intel chips, yet rumors fly constantly about its potential interest in using a chip from AMD. This generally indicates that Dell and Intel are negotiating terms of a new deal, and typically triggers a good deal of speculation, but never a purchase order for AMD chips from Dell.
In the case of Sony, AMD says Intel paid the Japanese electronics maker for exclusivity in its line of Vaio computers. AMD says it had 23% of Sony's business in 2002 but only 8% in 2003, and now it has none.
AMD is also accusing Intel of paying NEC to cap its purchases of AMD chips in such a way that NEC would buy at least 90% of its chips from Intel.
The complaint cites onetime Compaq Chief Executive Michael D. Capellas, now CEO of MCI (nasdaq: MCIP - news - people ), as saying in 2000 that Intel effectively punished Compaq for the amount of business it did with AMD by withholding delivery of server chips. It also quotes Capellas as telling AMD "he had a gun to his head" and had to stop buying AMD chips. At the time, Compaq was one of the few major PC makers consistently buying chips from AMD.
The complaint extends beyond PC makers to include retailers. AMD says Intel established and enforced quotas among electronics retailers Best Buy (nyse: BBY - news - people ) and Circuit City Stores (nyse: CC - news - people ), requiring them to stock Intel-based systems to the exclusion of systems based on AMD chips. It says that Office Depot (nyse: ODP - news - people ) has consistently declined to stock AMD-based computers, and that AMD has been shut out of systems sold by Media Markt, a large German electronics retailer.
It also says that Craig R. Barrett, Intel's former CEO and current chairman, threatened Acer Chairman Stan Shih with "severe consequences" for using AMD's Athlon 64 server chip. The threat, AMD says, coincided with an unexplained delay in the payment of $15 million to $20 million in market development funds owed to Acer by Intel. As a result, Acer did not participate in an AMD product launch in September 2003.
The case follows a March ruling by the Fair Trade Commission of Japan, in which the Japanese regulator warned Intel against using its market dominance to pressure computer makers to accept its chips. Regulators with the European Union are also investigating Intel's behavior.
AMD characterized the Japanese ruling as proving Intel behaved like a monopolist, and described Intel as "imposing limitations on Japanese PC manufacturers." In that matter, AMD had complained that Intel used its "Intel Inside" marketing program--under which Intel helps PC manufacturers pay for advertising campaigns--as leverage against PC makers who also used AMD chips in their computers.
Following that ruling, Intel said it would abide by the commission's order, but stipulated that it disagreed with the underlying facts in the case.
Intel executives could not immediately be reached for comment. AMD scheduled a conference call for Tuesday afternoon to discuss the case.
As of the first calendar quarter of the year, AMD accounted for 16.6% of the overall PC and server microprocessor market, compared to Intel's 82.2%, according to Cave Creek, Ariz.-based Mercury Research, a market research firm. AMD has been consistently winning small market share gains from Intel, usually a few tenths of a percentage point each quarter, over the past few years.
www.forbes.com/home/technology/2005/06/28/amd-intel-lawsuit-cx_ah_0628amd.html
The 48-page complaint accuses Intel (nasdaq: INTC - news - people ) of illegally coercing 38 companies--computer makers like Compaq, now a unit of Hewlett-Packard (nyse: HPQ - news - people ), Gateway (nyse: GTW - news - people ), Acer, Fujitsu and NEC--in order to preserve its position in the market for PC microprocessors.
AMD (nyse: AMD - news - people ) is accusing Intel of a "pervasive, global scheme to coerce Intel customers from freely dealing with AMD to the detriment of customers and consumers worldwide."
The suit alleges that Intel forces such computer makers as Dell (nasdaq: DELL - news - people ), Sony (nyse: SNE - news - people ), Toshiba and Hitachi (nyse: HIT - news - people ) into exclusively using Intel in return for cash payments. It further alleges discriminatory pricing and marketing subsidies designed to punish companies who use AMD chips in part of their product line.
The complaint also charges that Intel paid huge sums of money to Dell and Toshiba for remaining Intel-only PC makers. Dell in particular has been very public about its ongoing preference for Intel chips, yet rumors fly constantly about its potential interest in using a chip from AMD. This generally indicates that Dell and Intel are negotiating terms of a new deal, and typically triggers a good deal of speculation, but never a purchase order for AMD chips from Dell.
In the case of Sony, AMD says Intel paid the Japanese electronics maker for exclusivity in its line of Vaio computers. AMD says it had 23% of Sony's business in 2002 but only 8% in 2003, and now it has none.
AMD is also accusing Intel of paying NEC to cap its purchases of AMD chips in such a way that NEC would buy at least 90% of its chips from Intel.
The complaint cites onetime Compaq Chief Executive Michael D. Capellas, now CEO of MCI (nasdaq: MCIP - news - people ), as saying in 2000 that Intel effectively punished Compaq for the amount of business it did with AMD by withholding delivery of server chips. It also quotes Capellas as telling AMD "he had a gun to his head" and had to stop buying AMD chips. At the time, Compaq was one of the few major PC makers consistently buying chips from AMD.
The complaint extends beyond PC makers to include retailers. AMD says Intel established and enforced quotas among electronics retailers Best Buy (nyse: BBY - news - people ) and Circuit City Stores (nyse: CC - news - people ), requiring them to stock Intel-based systems to the exclusion of systems based on AMD chips. It says that Office Depot (nyse: ODP - news - people ) has consistently declined to stock AMD-based computers, and that AMD has been shut out of systems sold by Media Markt, a large German electronics retailer.
It also says that Craig R. Barrett, Intel's former CEO and current chairman, threatened Acer Chairman Stan Shih with "severe consequences" for using AMD's Athlon 64 server chip. The threat, AMD says, coincided with an unexplained delay in the payment of $15 million to $20 million in market development funds owed to Acer by Intel. As a result, Acer did not participate in an AMD product launch in September 2003.
The case follows a March ruling by the Fair Trade Commission of Japan, in which the Japanese regulator warned Intel against using its market dominance to pressure computer makers to accept its chips. Regulators with the European Union are also investigating Intel's behavior.
AMD characterized the Japanese ruling as proving Intel behaved like a monopolist, and described Intel as "imposing limitations on Japanese PC manufacturers." In that matter, AMD had complained that Intel used its "Intel Inside" marketing program--under which Intel helps PC manufacturers pay for advertising campaigns--as leverage against PC makers who also used AMD chips in their computers.
Following that ruling, Intel said it would abide by the commission's order, but stipulated that it disagreed with the underlying facts in the case.
Intel executives could not immediately be reached for comment. AMD scheduled a conference call for Tuesday afternoon to discuss the case.
As of the first calendar quarter of the year, AMD accounted for 16.6% of the overall PC and server microprocessor market, compared to Intel's 82.2%, according to Cave Creek, Ariz.-based Mercury Research, a market research firm. AMD has been consistently winning small market share gains from Intel, usually a few tenths of a percentage point each quarter, over the past few years.
www.forbes.com/home/technology/2005/06/28/amd-intel-lawsuit-cx_ah_0628amd.html
