Chip wars heat up as AMD sues Intel

Jun 28, 2005, 19:38 GMT

New York - Chip maker AMD on Tuesday sued its much larger rival Intel, claiming that the world's dominant manufacturer of microprocessors operated an unlawful monopoly and coerced computer makers and others in their dealings with AMD.

The 48-page lawsuit, filed in U.S. District Court in Delaware, identified 38 companies that AMD alleged were coerced by the Silicon Valley giant.

The suit came just weeks after Japan's Fair Trade Commission found that Intel had abused its monopoly on personal computer chips to stymie AMD's efforts to increase sales.

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

The suit claims Intel forced major customers such as Dell, Sony, Toshiba, Gateway and Hitachi into exclusive deals in return for cash payments, improved pricing or marketing subsidies. Other companies, such as NEC, Sony, Acer and Fujitsu, allegedly got rebates, cash and marketing funds for agreeing to cut back their use of AMD chips.

AMD also alleged that Intel established quotas at major retailers such as Circuit City and Office Depot to carry certain amounts of Intel-based products and limit their sales of computers based on AMD chips.

AMD said Intel has about 80 percent of worldwide personal computer microprocessor sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and excessive market power.

The complaint also cited former Compaq Chief Executive Michael Capellas as saying in 2000 that Intel effectively punished Compaq for the amount of business it did with AMD by withholding delivery of server chips. It also quoted Capellas as telling AMD "he had a gun to his head" and had to stop buying AMD chips. At the time, Compaq was one of the few major PC makers consistently buying chips from AMD.

Intel had no immediate comment on the lawsuit.