FTC’s Finished With Intel, but Broadcom Isn’t
A federal antitrust investigation of Intel Corp. ended Tuesday, but the world’s largest chip maker faced new charges by rival Broadcom Corp. that it is selling a communications chip based on Broadcom technology.
Broadcom accused its rival in court papers filed late Monday of stealing key technology and furtively using misappropriated Broadcom chips during trade demonstrations to mislead potential customers.
Intel denied the allegations. An early investor in the Irvine chip maker, Intel filed suit in March alleging that Broadcom had stolen trade secrets by hiring three former Intel employees and attempting to hire a fourth.
Separately, Intel said Tuesday that the U.S. Federal Trade Commission has notified the Santa Clara, Calif. company that it has closed a three-year investigation of Intel’s business practices.
The FTC had been investigating whether Intel had leveraged its dominance in the market for computer chips to control markets for other electronic components of personal computers.
In the antitrust investigation, FTC spokesman Mitch Katz confirmed that the commission has dropped its inquiry, marking the second time in the past decade that the agency has concluded an antitrust investigation of Intel’s business conduct without taking action.
“The issues with Intel were complex and the FTC is swamped with mergers and doesn’t have the resources to deal with conduct cases,” said Garret Rasmussen, a Washington antitrust lawyer.
Another obstacle to any case against Intel is that its main rivals, Advanced Micro Devices Inc. of Sunnyvale, Calif., and Taiwan-based Via Technologies Inc., “are doing quite well,” said Mark Gidley, a Washington antitrust lawyer. Neither Rasmussen nor Gidley were involved in the FTC probe.
Broadcom’s court action is the latest salvo in an increasingly acrimonious rivalry that began when Intel, long known for its success developing microprocessor chips for computers, stepped into the communications arena and challenged Broadcom’s hold on that fast-growing market.
But rivalries in the industry are complicated by the interdependency that characterizes the semiconductor market. Each chip draws from technologies combining design, materials and manufacturing techniques that can be covered by any number of patents. These technologies are routinely cross-licensed among companies.
The latest legal maneuvering between Broadcom and Intel involves a high-speed communications chip that Broadcom introduced in May 1999.
“This was such a breakthrough achievement that up until last week--more than one year after Broadcom’s introduction--no other company in the world even claimed to have such a chip in production,” Broadcom alleges in its court papers. “Intel itself has tried for years (and is still trying), without success, to develop such a product.”
According to the complaint, Intel initially asked Broadcom to supply it with the chip, known as a Gigabit Ethernet Physical Layer Transceiver. Broadcom alleges that when negotiations between the two companies broke down, Intel received the technology improperly from a Broadcom customer. The technology was used to develop a related line of Intel products, the suit alleges.
Intel also began demonstrating Broadcom’s product at trade events, “passing it off as an Intel product to convince potential customers that it had a viable product,” Broadcom claims.
Broadcom has asked the court to enjoin Intel and its wholly owned subsidiary, Level One Communications, from marketing or distributing a recently announced chip and related products. It also asks the court to appoint a special master to ensure protection of Broadcom’s trade secrets by monitoring Intel’s progress.
Market and industry analysts portray Intel as a latecomer to the communications market, desperate to play catch-up as growth in Intel’s flagship computer processor market has slowed.
Intel shares lost 4.6% Tuesday, dropping $2.06 a share to close at $43.31. Broadcom gained $4.75 a share, or 1.9% to close at $257.
* Times wire services contributed to this report.
