Intel fights AMD on practices

Intel on Thursday rebutted allegations by its smaller rival, Advanced Micro Devices, that unfair business practices had helped it win dominance over the microprocessor market.

In its first legal response to the charges made by AMD in June, Intel alleged its competitor owed its position to its own failings.

“AMD is dogged by its reputation for unreliability as a supplier,” it said in a 63-page court defence filed in Delaware. “The company has a history of manufacturing snafus that led it to cut off microprocessor supplies to many customers, making it difficult to regain share and crippling earnings.”

Intel has an 80 per cent global market share for PC processors, but Japan and South Korea’s Fair Trade Commissions, as well as the European Commission, have investigated it this year.

Japan’s FTC found that Intel had violated antitrust laws by offering rebates to five PC makers on condition they agreed to limit purchases of chips made by AMD and other rivals.

AMD’s complaint in June said Intel had engaged in a number of anti-competitive practices, including secret and discriminatory discounts and rebates. It quoted executives of the PC maker Gateway claiming Intel had “beaten them into guacamole” for having limited dealings with AMD.

Intel said in its response on Thursday “fanciful claims of its alleged misconduct had already been publicly denied by some of the third parties cited, including Acer and Dixons.”

Price discounts reflected “the essence of competition: earning more sales by cutting prices and expanding markets, while delivering more benefits to consumers.”

Intel said its success was a result of consistent performance over many years, offering customers a reliable supply and competitive products and cost.

In contrast, AMD “was content with anaemic investment in manufacturing capacity,” it said.

“The company entered into a failed partnership with [Taiwanese foundry] UMC through which AMD never sold a single microprocessor. A design-based strategy also failed, and AMD’s highest-volume factory is producing less than one-half of the chip volume promised in 2002.”

Intel said its Silicon Valley rival’s real goal in the lawsuit was to protect itself from price competition.

“Under the cover of competition law, AMD seeks to shield itself from competition, hoping to impede Intel’s ability to lower its prices and allow AMD to charge higher prices.”

AMD’s litigation has also spawned dozens of class-action lawsuits by consumers against Intel.

The main AMD v Intel Corp case is due to be heard in Delaware next year.