Intel Business Practices Face Investigation

[Aegis]

http://www.boston.com/business/articles/2008/06/07/intel_business_practices_face_investigation?mode=PF

Intel business practices face investigation

By Bloomberg News  |  June 7, 2008

SAN FRANCISCO - The Federal Trade Commission opened a formal investigation into Intel Corp.'s business practices, heightening worldwide scrutiny of the tactics the chip maker uses to dominate the $31 billion computer processor market.

Intel received a subpoena from the FTC on June 4, according to the Santa Clara, Calif., company. The FTC started an informal probe in 2006.

The action adds to investigations in Europe and Asia after Advanced Micro Devices Inc. accused Intel of using illegal practices to stop computer makers from buying AMD chips. Intel had about six times AMD's revenue last year, and the two companies account for almost all personal computer chip sales.

"The government is getting serious about this stuff," said David Wu, an analyst at Global Crown Capital in San Francisco.

Intel said its practices are well within US law and that there is fierce competition with AMD. Processor prices fell 42 percent from 2000 to 2007, Intel said.

"Both companies agree that this is an innovative market, and both companies agree that prices are falling," Intel general counsel Bruce Sewell said. "What's the problem?"

Intel shares have slumped 14 percent this year. AMD, based in Sunnyvale, Calif., declined 35 cents, or 4.5 percent, to $7.43 on the New York Stock Exchange.

AMD, founded a year after Intel in 1969, is the only remaining challenger in a market that once included chip makers such as Motorola Inc. Intel chief executive Paul Otellini fended off advances by AMD in 2005 and 2006 by revamping Intel's chips last year, while Advanced Micro delayed new products.

The European Commission, the 27-nation bloc's executive branch overseeing antitrust regulations, accused Intel in July 2007 of abusing its dominance. A judgment is pending in that case.

This week, South Korean regulators fined Intel about $25 million for offering what it said were illegal discounts. The company is appealing. In 2005, Japan forced Intel to remove contract clauses restricting Japanese computer makers from using other chip suppliers.

In the first quarter, Intel had 78.5 percent of the processor market, down from 80.5 percent a year ago, according to Cave Creek, Ariz.-based Mercury Research. AMD had almost all the rest.
© Copyright 2008 The New York Times Company

Anyone remember Cyrix?