Intel cites AMD exec who 'would never buy' AMD

In a recent response to longstanding antitrust accusations from chipmaking rival Advanced Micro Devices, Intel included in a Federal Trade Commission filing a quote from one of AMD's own executives critical of AMD chips.

Near the top of the document is the most condemning statement against AMD--an excerpt of a 2004 internal AMD communication from former AMD Executive Vice President Henri Richard, the company's then-highest-ranking sales executive: "If you look at it with an objective set of eyes, you would never buy AMD. I certainly would never buy AMD for a personal system, if I wasn't working here."

The Intel response (PDF), according to Intel spokesman Chuck Mulloy, was posted on the FTC Web site on Friday. Although Intel agreed to pay AMD $1.25 billion to settle an antitrust case in November, the FTC continues to pursue the case against Intel.

Intel got the internal AMD communication through the discovery process, Mulloy said. "Over time, more and more [of] this kind of information will be available in the case," he said Wednesday.

AMD technology has gone through periods when its chips have been decidedly less competitive than Intel's, according to Jim McGregor, chief technology strategist at research firm In-Stat. "You're looking at a period of time when AMD wasn't necessarily the most competitive product out there. AMD has gone through cycles," he said, adding that Intel has gone through a similar competitiveness ebb and flow.

Nevertheless, it is a stinging indictment of AMD processors. AMD has accused Intel of essentially blocking PC makers from buying its chips by using alleged anticompetitive business practices. (AMD has claimed that PC makers would rather buy its chips but were pressured not to.) "From a positioning standpoint, [Richard's] is a harsh statement against your own product," McGregor added.

Other statements made by Intel in the response, filed December 31:

• Decreasing Prices and Expanding Output. According to the Complaint, Intel's alleged conduct raised the prices of microprocessors (also known as "CPUs") and the products containing them. In reality, during the period covered by the Complaint, according to U.S. Bureau of Labor Statistics data, microprocessor prices, adjusted for quality, declined at an annual rate of 42 percent. This rate of decline was greater than that of any of the 1,200 other products that the bureau tracks, including any other high-technology product. During the same period, the quality-adjusted price of personal computers declined at an annual rate of 23 percent.
  
• The complaint relies on invective to paint ordinary and desirable competitive conduct as anticompetitive exclusion. For example, the complaint alleges that Intel "threatened" OEMs [original equipment manufacturers] with the loss of discounts, if they increased purchases from Intel competitors. But these alleged "threats" are nothing more than an inherent implication of procompetitive price competition: a supplier offers a better price for more volume when negotiating with a customer that demands greater discounts by threatening to take some or all of the business at issue to another supplier...the Supreme Court has repeatedly declared such above-cost discounting to be entirely lawful.
  
• Contrary to well-accepted antitrust principles, the complaint treats Intel as if it were a public utility that has an ongoing duty to help competitors...The complaint wrongly asserts, for example, that Intel, a minor player with a single-digit market share in compilers, "degraded" the performance of AMD microprocessors. That contorted charge rests on Intel's occasional development of compiler optimizations for some of its own microprocessors that were not immediately implemented for AMD microprocessors (which did not even provide the instructions necessary to support the optimizations, when Intel first released these optimizations).
  

"The decisions of Japan, Korea, the European Commission, the New York Attorney General's Office, the U.S. Federal Trade Commission, and Intel itself in settling with AMD--including paying us $1.25 billion--speak for themselves," AMD said in a statement Wednesday.