AMD (AMD): Losing In The Market, Winning In The Courts

AMD (AMD) has not had much luck competing with larger rival Intel (INTC). Its gross margins have collapsed. It is losing money, and Intel has been taking back customer sales in both the PC and server markets.

Now, the European Union has filed charges against Intel claiming that it unfairly competed against AMD by offering conditional rebates to PC companies that used its chips, making payments to companies for not using AMD products, and selling products at below market prices to hurt AMD’s market share and profit.

Intel may be starting to have the “Microsoft (MSFT) problem”. AMD has also filed claims about unfair practice by Intel in the US. While Intel has been able to sell 80% of the x86 chips worldwide, antitrust authorities may begin to look at it as a company that used bully tactics to drive AMD into its current financial state. It would not be unlike claims made by RealNetworks (RNWK) and Netscape. These actions resulted in Microsoft paying huge cash rewards to settle. The EU is still working Redmond over on its own charges against the company for bad behavior.

Now, it may well be Intel’s turn to be beaten and battered in the legal system. It is starting to look as if the largest chip company may have to write a massive check to its smaller rival.

Douglas A. McIntyre

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