High noon for chip rivals

In a move which promises to send shock-waves throughout the technology world, chip giant AMD is suing its larger arch-rival Intel.

A suit was filed in June in which AMD alleges that Intel uses scare tactics and coercion to prompt computer makers and other companies to use more Intel chips than ones sold by its rivals.

The complaint alleges that Intel has forced major customers, such as Dell, Sony, NEC and Hitachi, into exclusive, or partially exclusive deals with Intel in exchange for cash payments, rebates or marketing subsidies that were conditional on not doing business with AMD.

Two days later, AMD extended its antitrust claims to include Intel’s Japanese subsidiary, Intel Kabushiki Kaisha (Intel KK) by filing similar briefs with two Japanese courts. AMD Japan is looking for $50 million in damages after the Japanese Fair Trade Commission ruled that Intel deliberately tried to limit AMD’s market share by making Intel Inside marketing funds available to five PC makers ? NEC, Fujitsu, Toshiba, Sony, and Hitachi ? on the condition that they stopped buying AMD processors.

Thomas McCoy, AMD’s legal affairs and chief administrative officer, made this comment: "Intel maintains illegal monopoly profits at the expense of consumers and computer manufacturers, whose margins are razor thin. Now is the time for consumers and the industry worldwide to break free from the abusive Intel monopoly."

Intel CEO Paul Ottelini (pictured) issued the following response: ?Intel has always respected the laws of the countries in which we operate. We compete aggressively and fairly to deliver the best value to consumers.

?This will not change. Over the years, Intel has been involved in other antitrust suits and faced similar issues. Every one of those matters has been resolved to our satisfaction. We unequivocally disagree with AMD?s claims and firmly believe this latest suit will be resolved favourably, like the others.?

The legal action has now spread to Europe, with Intel EMEA offices raided by European Commission investigators. Several partner organisations, including DSG, have been served with documents from AMD asking them to preserve various emails and correspondence. Intel has until September 6th to respond the AMD’s complaint.

It?s not all bad news for Intel, however, as it has revealed a leap in its second quarter profits. Net earnings were $2.03bn (?1.17bn) during the three months to July 2nd compared with $1.76bn a year earlier.

So even if AMD wins its action we can rest assured that Intel will live to fight another day.