Semiconductor Antitrust

If the lengthy list of complaints that AMD has filed against Intel, its market-dominating competitor, is found to hold water, technology historians may remember our present day as the “Intel Inside—or Else” era.

In its lawsuit, AMD claims that Intel has used discriminatory pricing, threats to computer makers trying to sell AMD-based systems and other competition-killing practices to retain close to 80 percent of the x86 processor market, despite others often superior offerings.

Although the courts will ultimately decide the merits of AMDs claims, the PC and server microprocessor market looks to our eyes to be distorted in a way that shows that something—most likely anti-competitive practices by Intel—has been in play. Few major vendors and retailers have been willing to select AMD instead of or even in addition to Intel, and, as a result, the ability of PC consumers to choose between AMD and Intel processors was constrained significantly.

As a consequence, the benefits of competition—lower prices and greater innovation—have been lost to consumers. For us, this harm is of greater importance than the losses of market share and profit, of which AMD was deprived as a result of the alleged practices.

While the resolution of this antitrust case will not occur for at least several years, should Intel be found guilty of monopolistic practices, we believe that any punishments should be geared toward opening up the market and giving consumers the freedom of choice they deserve.

Unlike other lawsuits filed against Intel, AMDs current suit ought not to end with a simple financial settlement. A strictly financial settlement like the three reached between Intel and Intergraph between 1997 and 2004, totaling $675 million, will not level the uneven playing field in the PC market, which is the core of the problem.

In our view, behavioral remedies will go further in fostering competition. If Intel is proved guilty, we suggest that constraints similar to those placed on Microsoft after its antitrust trial would be a more effective remedy for the benefit of consumers.

AMD, unlike some victims of anti-competitive behavior, has emerged as a potent technology company—even after spending years in Intels shadow. AMD has done this by bringing 64-bit processors to the desktop market and pushing forward the development of multicore processors.

Instead of the company being awarded money for past grievances, any punishments levied against Intel should be used to foster future competition and allow AMD to win market share on its own technical merits.

If AMD is given the ability to supply its products to previously obstructed markets, users of PCs and servers would have the product choice they deserve. AMD, in turn, would attain success—or not—based solely on the merits of its products.

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