AMD to Intel: Gotcha! (Not?)

AMD is ecstatic with the $1.45 billion levied by the European Commission against Intel for alleged anti-competitive practices.

This was the culmination of a investigation started July 2007 after sifting through millions of documents. This was Intel’s third loss after losing anti-trust suits on Japan and Korea, although notably smaller and more narrowly focused.

The EC alleges the following:

“The Commission has found that Intel excluded its competitor in two ways:

  1. through illegal loyalty rebates
  2. by paying manufacturers and retailers to restrict the commercialisation of competitors’ products.

These illegal actions were designed to preserve Intel’s market share at a time when their only significant rival – AMD – was a growing threat to Intel’s position. This threat was widely recognised by both computer manufacturers and in Intel’s own internal documents seen by the Commission.”

The EC specifically alleged that:

  • Intel gave rebates to computer manufacturers for buying all, or almost all, of their CPU needs from Intel;
  • Intel paid computer manufacturers to delay launching AMD provisioned computers and to limit distribution of AMD PCs;
  • Intel engaged in cover-up activities to hide its anti-competitive practices.

However the EC did state that there was no contractual evidence – nothing in writing – to substantiate these charges but the EC “…was able to gather a broad range of evidence demonstrating Intel’s illegal conduct through statements from companies, on-site inspections, and formal requests for information.”

The trick on appeal is to make these charges stick.

However Intel is facing three similar cases in the US – a US antitrust action and one in New York, and a civil lawsuit by AMD against Intel. So far the odds are not looking good for Intel, batting 0-3 to date.

But what does this really mean for AMD – will it be so positive that AMD will significantly increase market share?

According to this article:

“Tom McCoy, AMD’s executive vice president for legal affairs, said in the statement that the ruling would see the industry benefit from an end to Intel’s ‘monopoly-inflated pricing’…”

Excuse me? AMD competes on price relative to Intel, and to suggest that somehow AMD will be better off if Intel lowers their price is nothing short of ludicrous. Intel is a powerhouse and garners incredible benefits from its 80% or so market dominance. Even though AMD has stung the elephant now and then, in the long run superior resources and experience curve pricing will win the day.

In addition, AMD has to step up its efforts to deliver leading edge technology products at competitive prices. It has to deliver and be a stable supply source if it ever hopes to break out of its 20% or so share. Not so easy. AMD’s resources should allow it to cherry-pick certain segments but being an across-the-board supplier is a bridge too far.

Intel has time on its side – it is appealing all rulings and this will delay any final rulings for some time to come. It is very difficult to prove charges such as these without hard proof – “he said” testimony only goes so far.

Overall I think this is somewhat positive for AMD but what it means tangibly is difficult at this time to quantify. Time is not on AMD’s side and what alleged practices will be changed is unclear, as apparently nothing exists in writing. If Intel reduces prices, I’m hard pressed to see how this benefits AMD. And if I were Intel, I think my best defense would be just that – reduce prices to defuse the alleged monopoly pricing, look like the good guy while increasing pressure on AMD’s financials.

This is a win for AMD?

About Joe Citarella 242 Articles
Joe Citarella was one of the founders of in 1998. He contributed as a site administrator and writer for over 10 years before retiring. Joe played an integral part in building and sustaining the community.

Be the first to comment

Leave a Reply