UPDATED 12:35 EST / APRIL 30 2009

Intel Facing Massive Fine $1 Billion for AntiCompetitive Practices Against AMD

NY Times is reporting that Intel is likely to face massive charges of anti-competitive behavior in Europe against AMD.

European antitrust regulators, which have been aggressively pursuing what they see as anticompetitive practices among technology companies, could impose their largest fine ever in a market-dominance case against the chip maker Intel.

The size of the penalty will be discussed by representatives from 27 European Union governments in early May. The decision would follow landmark rulings by the European Commission against Microsoft, which also is being investigated over its Internet Explorer browser, and a settlement with I.B.M., which is again the subject of a complaint.

The commission began investigating Intel in 2000 after Advanced Micro Devices, its archrival, filed a complaint. Both chip makers are based in the United States.

In two sets of charges, in 2007 and 2008, the commission accused Intel of abusing its dominant position in computer chips by giving large rebates to computer makers, by paying computer makers to delay or cancel product lines and by offering chips for powerful server computers at prices below actual cost.

Here is what I find ironic. On the heels of this charge of anti-competitive behavior, Forbes has a upbeat story on Intel saying that their competitive position has increased in this economy. Here is the main story from Forbes with no mention of the anti competitive charge.

If demand is strong, that could allow Intel to command a premium price for chips built using a process technology its competitors can’t match. If demand fades, Intel will take more fabs offline so they can upgrade them to the new process technology more quickly.

In other words: The tougher the economy gets, the tougher Intel gets. “We’re going to move as fast as possible to get as much of our capacity as possible on 32 nanometers.”

My Angle: Intel is a world class organization.  They have been investing in new technologies for many years. Intel is far from a slacker when it comes to pushing the envelope. Today, Intel is facing competition on many fronts Nvidia, AMD, and other entrants so to say they have a monopoly is not fair. Hell, Apple is looking to get into the chip business for their devices. Intel is far from getting a free pass when it comes to competing. I don’t even want to get started on the looming threat from Google.

Bottom Line: Intel is scared, and they should be paranoid. Their business is at risk and they need to compete.

I have no data on if the charges are true. I will start digging into this further and try to get more answers. To me this might just be politics around where Intel puts their factories – I’m sure the EU would be please to have Intel plants in Europe rather than the US.  I will see if AMD will get back to me.

Intel does have a strong presence in Ireland. Intel Ireland employs over 5,000 employees at its Leixlip campus (both high-skilled and contract workers), and as such it has been a major contributor to the performance of the Irish economy. Construction of the Fab 24 manufacturing plant in the 2000s has signified its continuing commitment to developing its Irish operations.

Something is definitely up with Intel, and lately I’ve been getting a bad vibe. Not sure what’s up over there.


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