Inside AMD’s complaint against Intel

* AMD takes on Intel

AMD last week filed an anti-trust suit against Intel in a move that surprised very few in the industry.

The suit, filed in the U.S. District Court for the District of Delaware, alleges that "for over a decade, Intel has unlawfully maintained its monopoly by engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with AMD." AMD charges that Intel’s conduct is "increasingly egregious" as AMD "has achieved technological leadership in critical aspects of the microprocessor architecture."

The 48-page complaint lists 38 companies - including HP, IBM and Dell - that AMD claims have been coerced by Intel.

AMD says Intel’s market share counts for 80% of worldwide sales by unit volume of x86 processors and 90% by revenue, thus making it a monopoly.

AMD’s suit is bolstered by a recent decision of the Fair Trade Commission of Japan, which found that Intel abused its monopoly power and violated Japan’s Antimonopoly Act. The European Commission is also pursuing an investigation against Intel for similar anti-trust violations.

AMD alleges that once it began taking market share away from Intel, Intel initiated illegal tactics against the company.

According to the complaint, Dell, Gateway and others have accepted cash payments and marketing subsidies to deal exclusively with Intel. When AMD got on HP’s roadmap for mobile computers, Intel withheld HP’s fourth-quarter 2004 rebate check. Intel threatened retaliation against customers who considered adopting AMD processors. Compaq CEO Michael Capellas said in 2000 that because of the volume of business given to AMD, Intel withheld delivery of critical server chips. Saying “he had a gun to his head,” Capellas told AMD he had to stop buying processors from AMD.

The case, which could go to trial in late 2006, will depend on Intel’s ability to show how its marketing practices benefited customers. Intel says it disagrees with the AMD suit and will not change its practices.

It is not the first lawsuit between Intel and AMD. The two companies have been involved in five suits over the past 25 years. In 1991, AMD sued for anti-trust violations. In 1995, the two companies agreed to settle all litigation.

Will AMD’s suit against Intel be successful, or will it incur no more than a slap on the wrist for Intel? Will the U.S. government get involved like it did with Microsoft? Will any executives from IBM, HP or Dell step up to AMD’s defense?

Let me know what you think. You can read the complaint at: http://www.amd.com/breakfree

As always, my e-mail address is mailto:dconnor@nww.com

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