AMD Slams Intel With Suit

Advanced Micro Devices Inc. has a tough road ahead of it in its quest to prove that archrival Intel Corp. has used illegal means to maintain its dominance of the microprocessor market, industry observers say.

AMD late last month filed an antitrust lawsuit in U.S. District Court in Delaware, alleging that its larger rival uses illegal means to maintain a PC processor monopoly. According to AMDs lawsuit, Intel, of Santa Clara, Calif., has used its financial clout to prevent AMD from making more inroads into the PC market, despite AMDs widely acknowledged technical prowess and its ability to compete with Intel on price.

"We deserve to have a significantly larger share of the market than we already have. The only thing thats keeping us from achieving those numbers is the illegal, monopolistic actions of our competitor," AMD CEO Hector Ruiz said in a conference call with analysts and reporters.

Intel disputes AMDs claims. "Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition," the company said in a statement, saying that AMDs complaint is "a legal case full of excuses and speculation."

Intel regularly controls about 80 percent of the x86 processor market. AMD, of Sunnyvale, Calif., has a market share of about 18 percent.

The suit identifies 38 companies that AMD said Intel has pressured in one way or another. It claims, for example, that Intel put pressure on Hewlett-Packard Co., whose PCs come with AMD chips, to limit its use of AMDs wares. The suit also says Intel used financial incentives to persuade Dell Inc. not to use the chips. Dell does not sell systems with AMD processors.

To win its case, AMD has to prove Intel has wielded its influence illegally rather than simply engaged in smart business practices by offering discounts and co-marketing incentives, and it must persuade executives with the OEMs to admit that they altered their business plans due to Intels pressure, said Roger Kay, an IDC analyst.

"Its hard to characterize Dell as a shrinking violet, cowering in the corner as Intel stomps around and imposes their will," said Kay in Framingham, Mass. "It just doesnt sound like the Kevin Rollins [Dell CEO] I know."

Thomas McCoy, AMDs executive vice president for legal affairs and chief administrative officer, said Intels business practices are clearly monopolistic. The fact that Dell and others are making money and growing their businesses doesnt mean that they arent being harmed.

"Dell is simply the most successful victim of the Intel monopoly," McCoy said.

He said AMDs claims were validated in March, when the Japan Fair Trade Commission ruled that Intel unduly influenced Japanese PC makers through price cuts and marketing incentives to steer away from chips from AMD and others.

John Spooner is a senior writer for eWEEK.com.