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Friday, September 02, 2005
Intel Answers AMD in Court


Intel Thursday filed its response to the antitrust complaint recently initiated by AMD regarding Intel's business practices. In the response, Intel refutes AMD's claims and states that its business practices are both fair and lawful.

In a 63-page document filed in U.S. District Court in Delaware, Intel emphatically denied having a monopoly on PC microprocessors and locking out AMD from deals with computer manufacturers through threats and targeted rebates. In its lawsuit filed in June, AMD claimed that Intel imposed scare tactics and coercion on 38 companies, including large-scale computer makers, small system builders, wholesale distributors and retailers.

The Intel response explains that AMD's claims are factually incorrect and contradictory. In addition, AMD's complaint -- by attempting to impede Intel's ability to lower its prices -- would hurt consumers, not help them.

"Innovation, investment, customer focus and great products have led to Intel's success over the years," said Bruce Sewell, Intel general counsel. "These are the things that have been fundamental to our decision making as we've sought to move the industry and the pace of technology forward.

"Likewise, AMD has made its own business decisions and choices that have determined its position in the marketplace. Yet, with its lawsuit, AMD seeks to instead blame Intel for the many business failures AMD has experienced that are actually a direct result of AMD's own actions or inactions."

In its response filed Thursday with the U.S. District Court in Delaware, Intel described the semiconductor industry business model that has led to phenomenal growth and steadily increasing value to customers over the years. That business model is based on three fundamental principles: production, product and price. The Intel response indicates that "AMD's choices and behaviors with respect to each of these core principles over the period covered by the complaint provide a compelling answer to the allegations it has made in this case."

Intel's response further states, "AMD's complaint presents a case study in legal dissonance. Although AMD has purportedly brought its complaint to promote competition, its true aim is the opposite. Under the cover of competition law, AMD seeks to shield itself from competition. AMD seeks to impede Intel's ability to lower prices and thereby to allow AMD to charge higher prices. AMD's colorful language and fanciful claims cannot obscure AMD's goal of shielding AMD from price competition."

Intel and AMD's long history of competing for microprocessor dominance has landed them in court before.

In its answer to the latest antitrust allegations, Intel referenced a 1992 ruling in which an arbitrator awarded AMD $10 million.

Intel admitted that it paid the $10 million, but added that the amount paid was less than 1 percent of the original claim.

The transcript from the 1992 arbitration remains under seal, an Intel spokesman said. Intel quoted from it because AMD has made the 1992 arbitration an issue in the case.

Later, in a 1995 legal settlement between the two companies, Intel noted that AMD left out the terms of the settlement in its complaint. In the settlement, AMD paid $58 million to Intel in licensing fees. Overall, Intel netted $19 million from that settlement, an Intel spokesman said.

In another section of the answer, Intel said Sony dropped AMD processors from its PC lineup in 2003 in an effort to reduce the number of component suppliers and not, as the complaint asserted, in a contract that demanded Sony exclusively use Intel chips.

In the complaint, AMD asserted that Intel intimidated MSI and Atipa and Fujitsu-Siemens from participating in the launch of AMD's Opteron Chip on April 22, 2003. Intel said in its answer that Atipa and MSI put out press releases outlining their support for Opteron on or around the same day and that Fujitsu-Siemens sells Opteron servers.

The complaint asserted that then-Intel CEO Craig Barrett said Acer would suffer "severe consequences" if the company participated in the launch of AMD's Athlon 64 chip, according to Acer founder Stan Shih. The answer said that Shih has refuted the assertions, stating that the conversation with Barrett only dealt with industry trends. The answer also noted that Acer continues to use AMD chips.

In its complaint, AMD asserted that Intel prevented it from joining the Advanced DRAM Technology group, a group working on a new memory standard, in a meaningful way. Intel said the organization invited AMD to join as a "co-developer," the highest level of membership. Intel further added that the ADT fell apart without producing a standard.

A summary of Intel's response along with the full response and other related information can be found at www.intel.com/pressroom/archive/releases/20050901corp.htm.

The AMD Comments

Just a few hours after Intel's response, AMD released the following statements:

"Intel's response is not surprising considering what they are trying to hide, but the facts of illegal monopoly abuse are clear and undeniable," said Thomas M. McCoy, AMD executive vice president, legal affairs and chief administrative officer. "Intel's anticompetitive business practices are under intense scrutiny by governments around the world. The Fair Trade Commission of Japan found Intel guilty of antitrust violations that harmed consumers based on direct evidence, and still Intel refuses to acknowledge wrongdoing. Intel's illicit conduct forces customers and consumers to pay artificially higher prices and limits their ability to choose the best products available."

"We look forward to presenting our evidence in front of the entire industry and the entire world. Let's put the truth on the table and let the court decide," McCoy continued.


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