Intel Corp. and its much smaller rival Advanced Micro Devices Inc. have been subpoenaed by the Federal Trade Commission about possible anticompetitive behavior in the microprocessor market, the companies said Friday.
The move by the FTC to escalate its probe to a formal investigation is the latest in a series of legal challenges facing Intel, the world’s largest computer chip maker. Antitrust investigations of Intel have been launched in several countries, including the U.S., based on complaints by AMD of unfair business practices that have stunted its growth.
Santa Clara-based Intel, which is facing antitrust charges in the European Union and was fined $25.4 million this week by South Korea’s antitrust regulator, said Friday that the FTC’s investigation was considered “informal” until the subpoena for records was served this week.
AMD claims Intel has maintained its dominance in microprocessors — the electronic brains of personal computers — by illegally threatening computer manufacturers with higher prices if they don’t stick exclusively with Intel chips.
Intel commands about 80 percent of the worldwide market for microprocessors. AMD has roughly 20 percent and claims it has been crippled by Intel’s sales tactics.
Lengthy delays in production of new chips also have hurt AMD’s competitiveness over the past year, blunting some of the momentum generated with AMD’s 2003 push into the lucrative server market, where it stole substantial market share from Intel.
Intel said it has been cooperating with the FTC’s probe. The company has maintained that its business practices are fully legal, despite AMD’s intensifying legal challenges over the past several years.
By opening a formal probe, the FTC can secure not only the records Intel has promised to provide but records from computer manufacturers and other Intel customers who have been involved in the disputed transactions.
“The company believes its business practices are well within U.S. law,” Intel said in a statement. “The evidence that this industry is fiercely competitive and working is compelling.”
Also on Friday, Sunnyvale-based AMD acknowledged receipt of an FTC subpoena in the investigation.
AMD said the probe helps it hold Intel accountable for sales strategies that it argues have hurt AMD’s business and technology consumers.
“Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on U.S. consumers and technology businesses,” Tom McCoy, AMD’s executive vice president and chief administrative officer, said in a statement. “In every country around the world where Intel’s business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action.”
AMD’s civil lawsuit against Intel in U.S. District Court in Delaware, filed in 2005 and scheduled to go to trial in 2010, could mean billions of dollars in damages if AMD wins. The parties are now exchanging documents in the “discovery” phase of that case.
The European Union has accused Intel of paying manufacturers to delay or cancel product lines using AMD chips and selling the manufacturers its own chips below the average cost of producing them.
On Thursday, Intel was slapped with a $25.4 million fine by the Korea Fair Trade Commission, which accused the semiconductor giant of using hefty rebates to convince Samsung Electronics Co. and other South Korean computer makers to not use central processing units, or CPUs, manufactured by AMD.
Intel has repeatedly denied breaking any laws.