Sunnyvale (CA) – AMD is riding the wave of the EU’s $1.45 billion fine imposed earlier today on Intel – with good reason: The fine resulted from a complaint AMD filed about nine years ago. But AMD also knows that even the billion-dollar fine is just pocket change for Intel and essentially does not matter. What matters is that AMD hopes that Intel will be forced to drop alleged exclusionary pricing practices.
AMD’s Pat Moorhead, vice president of Advanced Marketing at AMD, spent some time on the phone with us, addressing some of the questions Intel’s Paul Otellini faced earlier today. While Otellini did not go into much detail, since he claimed the company had not seen the 500-page ruling, and stated that Intel is preparing its appeal to bring in third party evidence, Moorhead feels it is pretty much a done deal: “The European Commission (EC) has been investigating this for the past nine years. And Intel has been found guilty.”
The executive repeated the EC’s findings, which basically state that Intel has been involved in criminal acts such as bribery and coercion. While Intel’s volume discounts are a basic business technique, exclusionary pricing pitched by a company that essentially is a monopolist is not. “Big companies believe they are above the law,’ Moorhead said. “They are not.” The AMD executive described Intel’s statements from earlier today as “expected diversionary tactics.”
So what does AMD get out of this ruling? Moorhead indicated that AMD could care less about the monetary fine, but is more interested in how Intel will have to change its business practices. “The EU will be watching Intel like a hawk, especially as far as exclusive deals are concerned,” he said. “This ruling is all about access to the market.” And Moorhead feels that AMD will now have much better opportunities to compete.
Otellini’s claim that AMD and Intel have been competing in Europe and prices have come down dramatically anyway was answered by Moorhead stating that no one can say what “could have been” if there had been a fair environment. Of course, AMD believes there would have been more innovation and lower prices.
While Otellini said he had no idea how the European case will impact the cases in the U.S. – there are three cases, one in New York, the FTC case and a civil lawsuit, which will go to trial in March 2010 – AMD thinks the outcome in Europe “will shine a bright light” to the U.S.
So, AMD is clearly upbeat today. However, if we assume that Intel in fact will remain guilty in Europe and will have to change its business practices, we wonder what could have been if the EC had fined Intel back in 2006, at the height of AMD’s success with its Opteron and Athlon X2 dual-core processors? Today, AMD is split in two companies, and will have to, no matter how we look at it, find a way to become successful again. Could AMD have kept its fabs if the ruling had come earlier? Makes you think.