AMD files antitrust suit against Intel

Chipmaker Advanced Micro Devices Inc. has filed an antitrust lawsuit against Intel Corp., accusing its market-dominating competitor of forcing customers into exclusive deals to keep them from buying AMD microprocessors.

The suit, filed Monday in US District Court in Delaware, alleges Intel has bullied 38 companies, including large-scale computer-makers, wholesale distributors and retailers, to secure a monopoly in the highly competitive x86 microprocessor market.

The microprocessors run the Microsoft Windows, Solaris and Linux families of operating systems. Santa Clara-based Intel's current market share of x86 microprocessors is about 80 percent of worldwide sales by unit volume and 90 percent by revenue.

"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation -- and these are being stolen away in the microprocessor market," said Hector Ruiz, president and chief executive officer of the Sunnyvale-based AMD.

He added that "people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses."

An Intel representative could not be reached before business hours Tuesday.

In March, Japan's anti-monopoly watchdog, the Fair Trade Commission, issued a warning to Intel, saying that the company was curbing competition in the microprocessor chip market by pressuring Japanese clients to buy its chips.

Intel denied the allegations but said at the time that the changes outlined in the agency's proposed cease-and-desist order would not affect its ability to compete in the Japanese marketplace.

The European Commission has said it is pursuing an investigation against Intel for similar possible antitrust violations and is cooperating with Japanese authorities.

According to the complaint, Intel has forced major customers such as Dell, Sony, Toshiba, Gateway and Hitachi into exclusive deals in return for cash payments and other deals. It also allegedly paid Sony millions of dollars for an exclusive deal on microprocessors and threatened retaliation against customers for introducing AMD computer platforms into their products.

Rick Whittington, a Caris & Co. analyst, said the legal action has been expected and breaks no new ground.

"The timing of this suit, in our view, is Sales and Marketing 101," he said in a research note. "Get the attention of the customer as market demand heats up and you have sizable supply coming down the pike. Put the competitor, to whatever extent possible, on the ropes and force them to adopt less aggressive sales tactics, if even marginal."

Shares of Intel fell 12 cents to $25.74 in pre-market trading, while shares of AMD rose 25 cents, or 1.5 percent, to $16.90.