News

AMD Sues Intel -- Alleges Unfair Trade Practices

• By Stuart J. Johnston
• June 28, 2005

Advanced Micro Devices sued Intel Corp. over antitrust issues on Monday, bringing the companies’ often contentious competition to a boil in federal district court in Delaware.

The complaint alleges that Intel is guilty of a range of anticompetitive behaviors aimed at undermining AMD in the marketplace, including “engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with AMD.” AMD sued under the Sherman Antitrust Act as well as the Clayton Antitrust Act.

“Our competitor has harmed and limited competition in the microprocessor industry,” said Hector Ruiz, AMD’s chairman, president and CEO. “On behalf of ourselves, our customers and partners, and consumers worldwide, we have been forced to take action.”

Specifically, AMD’s complaint claims that Intel violated antitrust laws by “forcing major customers to accept exclusive deals, withholding rebates and marketing subsidies as a means of punishing customers who buy more than prescribed quantities of processors from AMD, threatening retaliation against customers doing business with AMD, establishing quotas keeping retailers from selling the computers they want, and forcing PC makers to boycott AMD product launches.”

AMD also alleges that Intel’s coercion of customers ranges from companies as large as HP and IBM to small system builders to so-called “big box” stores like Circuit City. The rival chipmaker claims that information garnered from a recent antitrust investigation of Intel by Japan’s free trade commission bears out its accusations.

Intel vehemently rejected AMD’s characterizations and allegations, vowing to fight the case in court. “Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition,” said an Intel spokesperson. “AMD has chosen once again, to complain to a court about Intel's success, with a legal case full of excuses and speculation,” he added.

Intel's sales account for more than 80 percent of unit shipments and 90 percent of revenues in the market for x86 processors, according to an article Tuesday in the Wall Street Journal. AMD estimates its own share of the market has declined from a peak of 20.8 percent of unit shipments in 2001 to 15.8 percent by 2004.

AMD's original deal to make chips using Intel designs fell apart in the mid-1980s. Subsequent legal battles were settled with an agreement in 1995 that gave AMD the right to make x86 chips with its own designs.