SAN JOSE, Calif. (AP) — Intel Corp. and its much smaller rival Advanced Micro Devices Inc. have been subpoenaed by the Federal Trade Commission about possible anticompetitive behavior in the microprocessor market, the companies said Friday.
The move by the FTC to escalate its probe to a formal investigation is the latest in a series of legal challenges facing Intel, the world’s largest computer chip maker. Antitrust investigations of Intel have been launched in several countries, including the U.S., based on complaints by AMD of unfair business practices that have stunted its growth.
The dispute centers on incentives Intel offers computer makers for buying Intel chips – and the fierce retaliation AMD says those companies are threatened with if they offer products using AMD’s chips.
Santa Clara-based Intel is currently fighting antitrust charges in the European Union and was fined $25.4 million this week by South Korea’s antitrust regulator.
The company said Friday that the FTC’s investigation was considered “informal” until the subpoena for records was served this week.
AMD claims Intel has maintained its dominance in microprocessors – the electronic brains of personal computers – by illegally threatening computer manufacturers with higher prices if they don’t stick exclusively with Intel chips.
Intel commands about 80 percent of the worldwide market for microprocessors. AMD has roughly 20 percent and claims it has been crippled by Intel’s sales tactics.
Lengthy delays in production of new chips also have hurt AMD’s competitiveness over the past year, blunting some of the momentum generated with AMD’s 2003 push into the lucrative server market, where it stole substantial market share from Intel.
Intel said it has been cooperating with the FTC’s probe.
The company has maintained that its business practices are fully legal, despite AMD’s intensifying legal challenges over the past several years, and said Friday that the “evidence that this industry is fiercely competitive and working is compelling.”
Bruce Sewell, Intel’s general counsel, said that by opening a formal probe the FTC can now secure documents showing Intel’s communications with customers involved in the disputed transactions.
Intel is forbidden from releasing those documents voluntarily because of a protective order in place as part of a pending antitrust lawsuit filed by AMD that’s not scheduled to go to trial until 2010, Sewell said.
“From our perspective, it’s not a surprising event nor is there any really substantive change in the relationship we’ve had with the FTC,” Sewell said.
Also on Friday, Sunnyvale-based AMD acknowledged receipt of an FTC subpoena in the investigation.
AMD said the probe helps it hold Intel accountable for sales strategies that it argues have hurt AMD’s business and technology consumers.
“Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on U.S. consumers and technology businesses,” Tom McCoy, AMD’s executive vice president and chief administrative officer, said in a statement. “In every country around the world where Intel’s business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action.”
AMD’s civil lawsuit against Intel in U.S. District Court in Delaware, filed in 2005 and scheduled to go to trial in 2010, could mean billions of dollars in damages if AMD wins. The parties are now exchanging documents in the “discovery” phase of that case.
The European Union has accused Intel of paying manufacturers to delay or cancel product lines using AMD chips and selling the manufacturers its own chips below the average cost of producing them.
On Thursday, Intel was slapped with a $25.4 million fine by the Korea Fair Trade Commission, which accused the semiconductor giant of using hefty rebates to convince Samsung Electronics Co. and other South Korean computer makers to not use central processing units, or CPUs, manufactured by AMD.
Intel has repeatedly denied breaking any laws.
Intel shares fell 63 cents, or 2.6 percent, to $23.24 in midday trading. AMD shares fell 13 cents, or 1.7 percent, to $7.65.
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