Business

AMD Seeks to Bolster Anti-Trust Claims Against Intel

Pressing forward on its private anti-trust lawsuit against leading chipmaker Intel, Advanced Micro Devices (AMD) has subpoenaed records from several Intel customers, including major PC makers and smaller vendors.

AMD hopes the records will help bolster its argument that Intel used its market share to squash attempts by AMD to win new customers, with Intel using pricing and coercion to keep its market dominance in place.

All told, AMD is seeking records from more than 15 companies, among them computer makers, distributors and retailers. Those being asked to provide evidence include Dell, Hewlett-Packard, IBM, Lenovo Group, Gateway, Sun Microsystems, NEC and units of Fujitsu . Retailers Circuit City and Best Buy were also served papers.

While none were commenting publicly on the move, several of those targeted have already agreed with Intel that they would protect their correspondence, likely meaning that it will require court action in some cases for some of the documents to be produced.

Analysts said AMD is likely hoping to find a so-called “smoking gun” among the documents being sought, such as a memo in which Intel threatens to shut a PC maker off from buying some of its product line if that PC maker uses AMD chips instead of Intel products.

Unfair Advantage?

Those are the behaviors that Intel was accused of in AMD’s suit, which was first filed in June. Intel has steadfastly denied those claims, saying that rather than pricing and strong-arm tactics, it has employed stronger research and product development programs and advances in manufacturing to remain the dominant chip maker.

No one expects a speedy resolution to the dispute. In fact, the case is already seeing its share of courtroom delays. An exchange of evidence slated for this week, for instance, has been postponed indefinitely.

Most observers believe it will be at least early 2007 before such a case could come to trail, leaving plenty of opportunity for new developments, including possible settlements.

The two companies have been down this road before, in fact, with an arbitrator awarding AMD US$10 million in 1992 for similar claims. Intel notes that that award was a fraction of the $1 billion AMD sought in that case.

The recent claims focus on the Opteron and Athlon chips, with AMD claiming that some vendors were persuaded by Intel not to become early adopters of the AMD products. AMD was first to market with dual processor technology, though Intel followed closely behind.

High Pressure Sales

Analysts say the case may come down to how a court views the practices that Intel is accused of, assuming that others, such as the PC makers, are willing to confirm them.

Gartner Research Vice President and analyst Martin Reynolds said the so-called pressure could amount to routine high-stakes sales pressure, with Intel or representatives possibly using their range of products and their market penetration to boost the sales of other product lines and to keep profits healthy by boosting prices where possible.

But Reynolds said one of Intel’s counter arguments is also valid — AMD doesn’t have the same resources to devote to research and development and capital improvements such as new chip fabrication facilities as its larger competitor.

Another problem beside the he-said, she-said nature of the claims, is what type of solutions are available to a court. While one-time payments may temporarily shift the balance by giving AMD additional resources, they’re unlikely to change the competitive landscape. And any attempts to force Intel to dramatically alter itself in order to boost competition will be fought vigorously, Reynolds added.

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