Chip wars

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MEYER: AMD is looking forward to moving away from a world ruled by Intel to one that is ruled by constumers instead.

"This is not an isolated incident. The European Commission's charges are similar to conclusions of the Japan Fair Trade Commission in 2005 and reflect conduct that Korea's antitrust body is also investigating. In the United States and Japan, private litigation is focusing on the same pattern of abuse. Of course, the framers of antitrust laws don't care whether this or that company succeeds in the marketplace.

That's the way it should be. The essential purpose of antitrust laws is to tear down artificial blockades to competition, and to promote efficient economic productivity and the welfare of consumers," Ruiz wrote in the letter.

The cheering won't necessarily be all that loud at AMD, as the company has been embattled with sluggish financial results in recent years. The world's second biggest chip manufacturer reported a net loss of over US$3 billion for the entirety of 2008. Intel by comparison posted a net profit of $5.3 billion for the last financial year.

While financial losses are expected for most organisations in the current economic conditions, AMD also reported a net loss of US$3.3 billion for fiscal 2007. Early results for the first quarter of 2009 were not much better, with AMD posting a net loss of $416 million. This report was slightly unusual, as it included its newly spun-off semiconductor manufacturing corporation, GlobalFoundries. The chip foundry will act as an outsourced manufacturer for AMD and was established in partnership with the Abu Dhabi Government-owned Advanced Technology Investment Company.

Intel once again crossed swords with AMD over GlobalFoundries, claiming in March that the new spin-off is not recognised as a subsidiary and breaches the patent cross-license agreement that both companies entered into in 2001.

"Intellectual property is a cornerstone of Intel's technology leadership and for more than 30 years, the company has believed in the strategic importance of licensing intellectual property in exchange for fair value. However AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent," said Bruce Sewell, senior vice president and general counsel for Intel.

AMD hit back, declaring confidence in its claim that the chip foundry does not breach the existing agreement. In statements released in response to Intel, AMD accused the Santa Clara-based firm of trying to distract attention away from the antitrust case with the European Union.

"Should this matter proceed to litigation, we will prove that Intel fabricated this claim to interfere with our commercial relationships and thus has violated the cross-license," AMD wrote in a company statement in March.

The company also claimed that Intel's attempt to terminate AMD's license itself constitutes a breach of the agreement, which gives AMD the right to terminate Intel's license.

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