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Analysis: AMD takes gloves off in battle with Intel

The antitrust suit alleges ┬┐knee-capping' efforts by rival

By Martyn Williams and Sumner Lemon
June 28, 2005 12:00 PM ET

IDG News Service - The gloves have finally come off in the ongoing battle between Advanced Micro Devices Inc. and Intel Corp.
AMD today announced details of an antitrust lawsuit it has filed against Intel, saying its larger rival abused its monopoly position to stifle competition and maintain its dominance of the microprocessor market (see Update: AMD files broad antitrust suit against Intel). The suit was filed in U.S. District Court for the District of Delaware.
Central to the allegations is a recent report by the Japan Fair Trade Commission (JFTC) on Intel's business practices in that country. In several places, AMD's 48-page complaint points to findings in the JFTC report, which was released in March at the end of an 11-month JFTC investigation that found Intel had contravened Japan's Antimonopoly Act.
"The JFTC recommendation was one of the triggers," said Mari Hayashi, a spokeswoman for AMD in Tokyo.
In that report, the JFTC said Intel had offered five major PC vendors rebates and funds in return for using only Intel processors or capping the number of processors from competitors at 10%. As a result, Intel's market share in Japan grew from 76% to 89% between 2002 and 2003, the report said.
In response, Intel issued a statement saying it disagreed with JFTC's findings, but ultimately accepted the report and chose not to officially challenge its findings.
AMD's antitrust complaint paints a picture of Intel as an industry bully that used a combination of financial incentives and threats -- called "knee-capping" in the complaint -- to keep customers from buying from AMD.
"For a long time there have been questions over co-marketing money, whether Intel is using this to offer deep discounts and restrict this to companies that stock exclusively Intel," said Chris Ingle, a consultant at market analyst IDC.

In the complaint, AMD alleged that Supermicro Inc., a San Jose-based company that makes high-end servers, was so concerned that Intel would discover its plans to develop a server based on AMD's Opteron chip that it secretly moved the development team to a building behind its main manufacturing facility. When the server was finally released, Supermicro limited distribution to 60 customers and promoted it with a brochure marked "secret and confidential" that did not mention Supermicro by name.
A search of Supermico Inc.'s Web site today did not turn up any reference to products based on the Opteron.
The AMD complaint also provides a glimpse at the lengths to which AMD was willing to go in order to capture new business. In 2002, when AMD tried to offer chips for Hewlett-Packard Co. to use

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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