Intel: AMD’s performance was due to bad business decisions

AMD’s own poor business decisions are to blame for its lacklustre performance in the market, according to Intel, which this month filed its response to AMD’s lawsuit regarding the chip giant’s business practices.

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By  Caroline Denslow Published  September 11, 2005

AMD’s own poor business decisions are to blame for its lacklustre performance in the market, according to Intel, which this month filed its response to AMD’s lawsuit regarding the chip giant’s business practices. Intel has submitted a 63-page answer with the US District Court in Delaware, claiming that its conduct is not responsible for AMD’s market share in the processor industry. On June 27, AMD filed an anti-trust lawsuit against Intel alleging the latter has unlawfully maintained its x86 microprocessor market monopoly by engaging in worldwide coercion of customers to refrain from dealing with AMD (see IT Weekly 2-8 July 2005). Intel, which has denied the charges in the past, claims that AMD’s allegations are “factually incorrect and contradictory”, adding that 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, in a prepared statement. “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,” he said. “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,” Sewell stated. Intel said its successful business model is based on three fundamental principles: production, product and price. In AMD’s case, the chipmaker said that: “[the company] played it safe and was content with anaemic investment in manufacturing capacity, leaving Intel to shoulder the burden of investment to enhance the usefulness of computers and expand the market.” “Its failed partnership with UMC, a semiconductor company, as well as its reputation as an unreliable supplier and poor innovation efforts, contributed to AMD’s business setbacks,” it added. “AMD’s choices and behaviours 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 said. While it admitted distributing so-called “market development funds” to PC manufacturers, Intel denied AMD’s allegations that it made payments and threatened PC companies, distributors and retailers with retribution for using AMD processors. “The decision whether to purchase from AMD, and in what quantity, is made by these customers without coercion or anticompetitive conditions,” Intel said in its answer. Reacting to Intel’s comments, Thomas McCoy, AMD executive vice president of legal affairs and chief administrative officer, said they were expecting Intel to respond that way. “Intel’s response is not surprising considering what they are trying to hide, but the fact of illegal monopoly abuse are clear and undeniable,” McCoy said in a statement. “Earned success is one thing, illegal maintenance of a monopoly is quite another,” Hector Ruiz, chairman and chief executive of AMD, in a state-ment following its lawsuit. “History shows that mon-opolies limit choice, stifle innovation and harm consumers. Intel is a monopoly pure and simple and it is time the industry broke free from their chains,” he added.

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