AMD to Intel: We Told You So

AMD wasted little time attempting to
exploit the European Commission’s (EC) Friday charges that the world’s number
chipmaker engaged in antitrust behavior against AMD.

Two days after the EC levied the accusations, AMD
CEO Hector Ruiz said on a national teleconference Monday the EC charges are
further proof of what the company has maintained for years: Intel illegally
manipulates the chip market to maintain a monopoly position over competitors.

“There is an integrated scheme [by Intel] to boycott AMD,” Ruiz said. “The
microprocessor market as controlled by Intel harms consumers rather than
serves them.”

According to the EC charges, the Santa Clara, Calif.-based Intel conditioned rebates to original equipment manufacturers (OEM) on
the OEM’s buying most of their chips from Intel. The EC further maintains, in
some cases, Intel made direct payments to OEMs to either delay or cancel the
launch of a new product line featuring AMD chips.

In addition, the EC said Intel offered below-market prices on server chips in
hopes of undermining AMD bids.

Intel on Friday categorically denied the charges, maintaining the
microprocessor market is “functioning correctly” and that Intel’s business
behavior has been “lawful, pro-competitive and beneficial to consumers.”
Intel, which has 10 weeks to respond to the EC charges, was unavailable for
comment on Monday.

Intel noted the case is based on complaints from a direct competitor rather
than customers or consumers.

“Intel would like to position this as a dispute between two companies, but it
is between the governments of Europe and Intel,” Tom McCoy, AMD’s executive
vice president of legal affairs, said on the teleconference. “There are no
trade secrets or intellectual property involved.”

McCoy added Intel would have to fight the charges on “merit, not bullying or
brawn.” He further said, “The evidence is coming from Intel and the computer
industry; not us.”

The EC charges follow a multi-year investigation, including high profile raids of
Intel’s European offices in 2005. The raids followed a U.S. lawsuit filed by
AMD against Intel.

In the lawsuit, AMD
claims Intel paid companies like Dell and Toshiba not to do business with AMD,
and paid Sony millions for exclusivity. AMD claims its share of Sony’s
business went from 23 percent in 2002 to 8 percent in 2003, to zero percent

AMD also charges that Intel forced NEC, Acer and Fujitsu into partial
exclusivity agreements by offering rebates to those who agreed to limit or
forgo AMD purchases. The chipmaker also said Intel paid NEC several million
dollars for caps on NEC’s purchases from AMD.

The Sunnyvale, Calif.-based AMD is seeking unspecified treble damages for the
losses it claims it has sustained due to Intel’s actions.

“[The EC charges] portend well for AMD’s [U.S.] case,” McCoy said.

Also in 2005, Japan’s Fair Trade Commission ruled Intel violated the country’s
antitrust laws when it attempted to force full or partial exclusivity for
Intel chips with five Japanese PC makers. In addition, South Korea currently
has an active investigation underway about Intel’s business practices.

McCoy said the series of legal actions and accusations is having an impact.

“There is increased global scrutiny on Intel,” he said. “Global OEMs are
taking advantage of the spotlight, particularly following Japan’s ruling,
raids by the EC and our lawsuit.”

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