Intel to AMD: It’s Your Own Fault You’re an Also-Ran

The chips are down in Advanced Micro Devices Inc.’s antitrust lawsuit against Intel Corp.

Two months after AMD sued its Bay Area archrival, Intel on Thursday fired back with a blistering response that claims AMD’s own stumbles in marketing and technology are to blame for its small share of the global market for computer chips.

Santa Clara-based Intel accused Sunnyvale-based AMD of being a historically unreliable supplier that makes “anemic investment” in research and then blames its inability to lure customers on Intel’s tactics.

“AMD’s complaint presents a case study in legal dissonance,” Intel said in its response, filed in U.S. District Court in Delaware. “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.”

Despite the strong language of Intel’s response, some industry experts said the world’s largest chip maker was dodging the heart of the matter -- whether it engages in anti-competitive practices to preserve its market dominance.

“They’ve engaged in blaming the victim,” said David Balto, a former policy director of the Federal Trade Commission. “They said, ‘We’re not going to talk about whether we’ve engaged in antitrust activities, but AMD’s a stinky firm,’ something like what children say. But under antitrust law, that rarely carries a lot of weight.”

AMD claimed in June that Intel bullied computer makers into using its microprocessors exclusively and threatened to cut off the supply to manufacturers that buy chips from rivals. Complaints about Intel’s tactics have been voiced in Silicon Valley for years, and Intel and AMD have tangled over similar claims in court before, in 1991.

The two companies settled their previous case out of court. Given the animosity between the two companies, analysts saw little prospect that the current case would be resolved amicably.

For its part, AMD quickly rejected the claims of its much larger rival.

“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’s executive vice president for legal affairs. “Intel’s anti-competitive business practices are under intense scrutiny by governments around the world.”

For instance, Japan’s Fair Trade Commission in March found that Intel violated antitrust regulations by demanding that computer companies use AMD processors in no more than 10% of their PCs. Intel said it would change its business practices but did not admit wrongdoing.

Intel on Thursday countered that it welcomed vigorous competition.

“Failures and setbacks for which AMD today seeks to blame Intel are actually a direct result of AMD’s own action or inaction,” Intel general counsel Bruce Sewell said.

Nathan Brookwood, a semiconductor expert who runs the consultancy Insight 64, said such accusations were more reminiscent of AMD’s past and don’t address the issues of today.

“If you want to attack AMD’s checkered past for times when it was not a reliable supplier, there’s data there to support that view, especially if you go back pre-1999 or 2000,” Brookwood said. “But this is like throwing [President] George Bush’s youthful indiscretions in his face today.

“I believe the AMD that we’ve seen for the last five years is a very different AMD from the one we saw earlier, one that actually has done a great deal of technology innovation,” he added. “What Intel is saying is true, but probably no longer relevant.”

The sparring between the two Silicon Valley stalwarts “is par for the course,” said Dean McCarron, an analyst with semiconductor market researcher Mercury Research. “Intel’s response is a little more high-profile than we’ve seen in the past, but so was AMD’s initial accusation. So I think we’re seeing a proportional response to AMD’s filing.”