The antitrust suit that the state of New York filed against Intel Corp. today, coupled with previous antitrust actions and lawsuits targeting the chip maker, could give rivals like Advanced Micro Devices Inc. room to pick up some steam in the processor business.
New York Attorney General Andrew Cuomo today filed a federal antitrust lawsuit alleging that Intel threatened computer makers, made payoffs and engaged in a "worldwide, systematic campaign of illegal conduct."
Some analysts said the New York lawsuit is just one more log on the legal pile for Intel, which already is bogged down with pending class-action lawsuits and antitrust actions in South Korea, Europe, the U.S. and Japan. Intel's legal problems could be creating a huge drag on a company that's forced to constantly fend off attacks from the likes of AMD and Nvidia Corp. in a hot microchip market, they added.
"This is a huge resource and time drain for them," said Dan Olds, an analyst at Gabriel Consulting Group Inc. "The discovery and defense process is going to take a huge amount of time away from the company."
The latest distraction could prove to be a boon for AMD, which has been lagging behind Intel for the past few years, noted Rob Enderle, an analyst at Enderle Group.
"It makes Intel appear weaker and makes OEMs less concerned about retaliation for using AMD's offerings," added Enderle. "Certainly, though the chip market tends to move relatively slowly and Global Foundries [AMD's minority-owned chip manufacturing arm] isn't yet large enough to go head to head with Intel, this clearly works to AMD's advantage. An image campaign would resonate now and this will give AMD a lot of visibility. Generally, AMD should win more of the really close calls."
However, both Enderle and Olds did add that Intel's technology remains ahead of competing offerings from AMD and other companies, and that's very important to most users. Even though Intel may have legal troubles, the depth, breadth and performance advantages of its processor lines make AMD's job difficult.
Analysts were also quick to note that the New York lawsuit may be more about officials seeking the limelight or a financial settlement for the state than it is about beating down an antitrust player.
"New York is piling on Intel by pushing its own action. The state of New York doesn't have any special standing or hasn't been particularly damaged by any alleged Intel conduct. However, it is an opportunity to get some press attention and maybe even a big settlement from Intel," said Olds. "Intel has the resources to buy lawyers by the metric ton, and they're going be needing plenty of them over the next several years."
The charges in the New York suit are similar to those included in a federal antitrust lawsuit AMD filed against Intel in 2005, said Chuck Mulloy, an Intel spokesman. That suit is expected to go to trial next spring.
"This is the same case, just repackaged," Mulloy said. "We disagree with the New York attorney general. Neither consumers, who have consistently benefited from lower prices and increased innovation, nor justice are being served by the decision to file a case now. Intel will defend itself."
Mulloy said Intel is currently preparing for a pretrial conference related to the AMD lawsuit that's set for mid-December. "If we prevail there, then I think we will be fine," he added.