FTC Investigation on Intel No Help Yet for AMD (INTC, AMD)

Intel Corporation (NASDAQ: INTC) has issued a response to the issuance of a subpoena from the Federal Trade Commission in the US.

The processor and chip giant noted that it was served a subpoena on June 4.  The subpoena is related to Intel’s business practices "with respect to competition in the microprocessor market."

Advanced Micro Devices (NYSE: AMD) has been making allegations of unfair marketing practices and many have alleged rebating in the years up to now.

Intel also noted that since 2006 it has been working closely with the FTC on an informal inquiry into competition in the microprocessor market.  It also noted that it has provided the FTC staff with a considerable amount of information and thousands of documents.

This subpoena will allow the FTC will also be able to access information from other parties relating this matter.  For whatever this is worth, there are many investigations and many cases that Intel is involved in.

Intel has noted that it will work cooperatively with the FTC staff to comply with the subpoena and continue providing information.  It also believes its business practices are well within U.S. law.  One issue that Intel has noted is that the prices for microprocessors declined by 42.4% from 2000 to end of 2007.  It also noted, "When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

On such a poor market day, it’s hard to imagine that any of the tech stocks involved would win on this news.  Intel shares are down 2.2% at $23.37, which is in-line with the market drop.  Shares of AMD are still down 1.8% at $7.64.  Unfortunately this is going to be quite some time before AMD gets any help from this.  Its trial against Intel is scheduled for next year, or that was the last data we saw.

Unfortunately for AMD and unfortunately for the FTC, as far as the processor market is concerned Intel just has better multi-core chips.  Unless AMD or another company has been hiding its crown jewel, most computers are going to have Intel processors in them because that is what customers want.  Can that change?  Sure.  Is that likely to change any time soon?  No.

Jon C. Ogg
June 6, 2008