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AMD on EC’s ruling on Intel — will it help AMD break into the top ranks?

May 20, 2009

As promised, dear friends, here is AMD’s comment on the recent European Commission’s (EC) ruling on Intel! It still remains to be seen how this ruling will ultimately help consumers and AMD in the long run. Nevertheless, here goes!

On the EC’s recent ruling on Intel, according to Ramkumar Subramanian, VP, Sales & Marketing, AMD India, after an exhaustive investigation, the EU came to one conclusion — Intel broke the law and consumers were hurt. With this ruling, the industry will benefit from an end to Intel’s monopoly-inflated pricing and European consumers will enjoy greater choice, value and innovation.”

Fair enough! So, what course of action should the industry now take?

Subramanian says: “We believe that the EC’s decision signals an inflection point in the IT industry. The ruling has the very real potential to transform the industry from being artificially organized around a monopoly that seizes nearly all the profit, into a marketplace democracy that puts consumers first. We also see the very real potential for a step change in the long-term pace of innovation and differentiated value propositions.

“The final ruling — years in the making — is about how Intel deliberately used its monopoly power and profits to control a critically important global industry. How it has decided what and from whom consumers are allowed to buy computers. How Intel severely punishes computer manufacturers and others in the IT ecosystem that do not play by its rules. That is what Europe is putting a stop to. We applaud them for doing so, and if you buy computers and value innovation, so should you.”

I am more interested to know how this EC fine on Intel will go along in any way in improving the global processor market.

The AMD executive adds: “The size of the fine is a clear sign that this was not a close call for the Commission. That Intel’s conduct was of a very serious nature. But it is not the size of the fine that matters.

“What matters are the remedies that Intel now has been ordered to implement, and implement immediately! No illegal conditioned rebates, no coercion, no threats or intimidation to OEMs or retailers.”

Great! So, how will this help AMD improve its position?

Subramanian notes: “We firmly believe that the EC’s bold action to wrest control of the market from Intel to consumers triggers an inflection point that will reset the way business is done across the IT industry. The EC’s ruling forces Intel to immediately change its business practices — this is a punch they cannot slip.

“Every antitrust regulator in the world is now looking over Intel’s shoulder to ensure consumers are protected. And in this equation, everyone wins but Intel.”

Even then, how will this ruling benefit consumers? Will it in any way influence them to buy more AMD products?

He says: “The intent of the ruling is to protect consumers. A consumer’s best friend is competition. Competition is the fuel for innovation, and innovation is the fuel of the IT industry. So first and foremost, we expect that true competition will increase the pace and quality of innovation.

“All market participants — OEMs, retailers and end customers alike — are now free to make choices purely based on the merits of a given product, and are no longer held captive by the “System Intel” designed to keep the industry locked in, the consumers locked out and competition locked down.”

Now, AMD has welcomed this fine of EUR1 060 000 000 (EUR1.06bn) imposed by the EC on Intel! That is fine, but how will all this help the industry or the chip market? Or even improve/reduce market shares?

Subramanian adds: “All we have ever wanted is competition on the merits of the products. We have proven that despite Intel’s deliberate tactics to block AMD’s access to the marketplace, we have still been able to either out-innovate or remain competitive at the technology level with a rival roughly 10x our size and resources.

“Japan, Korea and the European Union all agree that Intel limited AMD’s market share through bribes and threats, and that business model needs to end. We are ready for a new marketplace in which consumers and products rule, not Intel.

“We firmly believe that we have what it takes to grow our business — all we, and the industry, need is an opportunity to let natural market forces work.”

Recently, there was this report of chaos reigning among the top 20 semiconductor company rankings!

According to the report, AMD jumped into the top 10 group, moving up three spots from 12th in 2008 to 9th in 1Q09. However, AMD is also one of the few top semiconductor companies that has stated it expects 2Q09 sales to be worse than in 1Q09. How long will it stay in the top 10?

If AMD does intend to beat Intel, fine or no fine, it probably needs to do much more! I hope all of this to be beneficial for AMD in the long run! Time will tell!

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