Intel’s Japanese Offices Raided

Intel is under investigation by Japan’s Fair Trade
Commission for its business practices in the area, the chipmaking company
confirmed Friday.

Investigators took documents in an unannounced visit from three offices
in Tokyo Thursday. The government agency was not specific about its intent,
but published reports suggest it wants to know if the chipmaking giant
pressured PC manufacturers into using only Intel products.

Intel legal council Chuck Mulloy said the Santa Clara, Calif.-based
company is cooperating with the investigation.

“We don’t have a clear indication from them about what this is about,”
Mulloy said.

Intel is the dominant player when it comes to powering PCs. According to
recent reports from IDC, more than 80 percent of personal computers
worldwide run on Intel chips. In Japan, that number runs up to about 85
percent of all PCs shipped to the country.

AMD is the
second largest chipmaker with 16.8 percent of the market share. Taiwan-based
Via Technologies and Transmeta round out the top four.

IDC Analyst Roger Kay told the investigation
should have very little impact if at all on Intel’s sales in Japan.
According to SEC filings, Intel made $2.66 billion in sales in Japan last
year, or about 9 percent of its total revenue.

“This will settle out pretty quickly,” he said suggesting that the
investigation could be partly retaliation against U.S.-based companies.
Similar inquiries by the commission into the business practices of Intel
rivals AMD and Transmeta, have also been reported.

The Fair Trade Commission’s action against Intel is similar to a raid on
Microsoft offices in Tokyo back in February 2004.
Investigators looked at whether the Redmond, Wash.-based software vendor’s
licensing of Windows XP violated the country’s anti-monopoly law.

Shares of Intel stock dropped 25 cents, or 0.91 percent, to close at
$27.37 on Thursday. The U.S. markets were closed on Friday for the Easter
and Passover weekend. Intel is expected to report its quarterly earnings on
Tuesday, April 13.

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