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Advanced Micro Devices, Inc. (AMD)
AMD Files Suit Against Intel:
Sunnyvale-based Advanced Micro Devices Inc., the second-largest maker of chips, has filed an antitrust lawsuit on Monday in a Delaware federal court against Santa Clara-based Intel Corp. The 48-page lawsuit blames Intel of forcing customers into exclusive deals to keep them from buying AMD microprocessors. AMD accuses Intel of a "pervasive, global scheme to coerce Intel customers from freely dealing with AMD to the detriment of customers and consumers worldwide."
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Charles Diamond, an attorney with O'Melveny & Myers LLP who led AMD's investigation, said that the company could seek "hundreds of millions of dollars if not billions of dollars" in damages and will do his best to have the case before a jury by the end of 2006. This is not the first clash between the companies, since they have been involved in legal battles for 18 years. AMD revealed that Intel coerced 38 companies, including well-known brand names such as Dell, Sony, Toshiba and Hitachi into solely using Intel in return for cash payments. It further applied discriminatory pricing and marketing subsidies designed to punish companies who use AMD chips in part of their product line. For example, former Compaq CEO, Michael Capellas said in 2000 that "he had a gun to his head" and would have to stop buying from AMD. He mentioned that Intel was withholding delivery of significant server chips because of the volume of business he was doing with AMD.
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In another incident, Gateway executives disclosed that Intel had "beaten them into 'guacamole"' in revenge for doing business with AMD. AMD charges that even retailers were pressured by Intel. It said Best Buy Co. Inc. and Circuit City Stores Inc. were "effectively" required to stock Intel computers "overwhelmingly or exclusively," limiting choices to customers. Further, Internationally, Japan's fair trade authorities recently said Intel had violated anti-monopoly laws and stifled competition from AMD. Intel also faces scrutiny from European Union investigators looking into complaints from AMD. There is no doubt that Hector Ruiz, AMD chairman, president and chief executive, is outraged by these events. He said in a statement on Tuesday, "everywhere in the world, customers deserve freedom of choice and the benefits of innovation -- and these are being stolen away in the microprocessor market."
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Shares of Intel, the world's largest chip maker, were down 8 cents at $25.80 in early trading on the Nasdaq. Intel representatives could not immediately be reached for any comments. AMD shares were up 24 cents, or 1.4 percent, at $16.91 in early New York Stock Exchange trading. It will be interesting to see how Intel will respond and bounce back from the lawsuit by AMD. Both AMD and Intel are stocks to watch over the next few weeks and months.
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Profile |
Advanced Micro Devices, Inc. is a semiconductor manufacturer with manufacturing facilities in the U.S., Europe and Asia and sales offices throughout the world. Its products include a wide variety of industry-standard digital integrated circuits which are used in many diverse product applications such as telecommunications equipment, data and network communications equipment, consumer electronics, personal computers, workstations and servers.
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