An interesting story over the past few years in the processor industry is the brutal price war between Intel and AMD. The price war has shattered AMD and left them struggling for survival with suggestions they might have to give up their fabs and go fab-lite or fabless. The war was started by Intel and then Hector Ruiz, the then CEO of AMD, used the price war to try and gain market share. However, delayed product rollouts by AMD and losing the performance advantage they had for a short while meant a loss of market share and a change in AMD leadership. Of course, one of the big causes of the business downturn was the purchase of ATI by AMD which was in excess of US$1 billion.
In the meantime, AMD has long accused Intel of unfair business practices. A trial pertaining to AMDs complaints is set to start in 2010 and will continue for an extended period of time. The Mercury News writes:
Buried in more than 150 million pages of documents compiled in the legal dispute between Silicon Valley chip makers Advanced Micro Devices and Intel is a remarkable tale of alleged corporate nastiness that could keep the courts and regulatory bodies buzzing for years.
AMD claims its larger rival Intel has used under-the-table payments, threats and other "dirty tricks" to deter computer makers from buying AMD's semiconductors. It says Intel, among other wrongdoings, offered a Tech Data executive a $1 million bribe, browbeat Acer into backing out of an AMD promotion and sold software that crashed computers running AMD chips.
The pages of AMD's suit accuse Intel of so many acts of market intimidation they "read like a chapter from 'The Godfather,' " according to Nathan Brookwood, a research fellow at the Saratoga market consulting firm Insight 64.
Intel insists it has done no more than provide legitimate incentives to use its products and that its business practices have helped keep computer costs low.
Still, the accusations by AMD - whose stock has plunged in recent months to nearly a 20-year low - have sparked a worldwide furor. Authorities in Japan, South Korea and Europe also have accused Intel of wrongdoing. Moreover, the Federal Trade Commission and New York's attorney general in recent months have launched investigations into its practices.
How all this plays out could have multibillion-dollar implications for both companies as well as for consumers, experts say. But determining what really has gone on in the chip industry could prove monumentally daunting.
A special master assigned to the case estimated that the documents dredged up by the suit so far would produce "a pile 137 miles high." Yet depositions with key industry figures are just beginning and the fact-finding could drag on for years.
"This case is on track to be the largest in terms of discovery in the history of civil litigation," said Intel spokesman Chuck Mulloy.
This case will be interesting to watch over the next few years. I am just glad I will not be the one reading the 150-million pages entered into evidence!
The Mercury News: 'Dirty tricks' or fair play by Intel in rivalry with AMD?
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