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June 06, 2008

Intel Downplays Implications of Subpoena from FTC

By Mae Kowalke, TMCnet Senior Editor

News broke Friday that Intel (News - Alert) Corp, Advanced Micro Devices (AMD), and possibly other semiconductor manufacturers were being served with subpoenas by the U.S. Federal Trade Commission, which is investigating possible anticompetitive behavior on the part of Intel and its rivals.  



 
For Intel, being subpoenaed was a particularly bad news, Associated Press noted in a Friday report. Of late, the company has faced a string of antitrust suits in several countries (including charges from the European Union and a $25.4 million fine in South Korea). These allegations of unfair business practices have had a negative effect on growth of the world’s largest semiconductor manufacturer.
 
The FTC (News - Alert) subpoena, Reuters reported, was served to the Intel on June 4, and steps up an informal inquiry by the federal agency into the giant chip-maker’s activities. Intel said it has been cooperating with the investigation since 2006.
 
Not surprisingly, Intel’s response, Reuters (News - Alert) said, was to emphasize that its business practices are “well within” the restrictions of U.S. laws.
 
AP reported that AMD (News - Alert) acknowledged it, too, was served with a subpoena as part of the FTC’s investigation. For AMD, though, being called on to testify wasn’t a negative turn of events. Instead, it was merely the next step toward potential resolution of a lawsuit the company filed against Intel in 2005 at the U.S. District Court of Delaware.
 
The trial for this suit isn’t scheduled to begin until 2010, so there’s plenty of time left for the FTC to gather information. As such, the suit is still in the “discovery” stage, with AMD hoping that the information turned up will land it billions of dollars in damages from Intel, AP said.
 
Intel put out a statement Friday in which it indicated that the FTC’s actions are merely being taken to gather information from other players in the industry as part of an industry-wide investigation, implying that the company wasn’t necessarily being targeted as the only alleged wrongdoer.
 
“By proceeding to a subpoena, the Commission will be able to obtain not only information that Intel has already committed to provide but also information from other parties,” Intel said in the Friday statement. “Consistent with its standard practice Intel will work cooperatively with the FTC staff to comply with the subpoena and continue providing information.”
 
Intel added that evidence shows the semiconductor industry is very competitive, but that players are abiding by regulatory restrictions and that the system is working fine.
 
“For example, prices for microprocessors declined by 42.4 percent from 2000 to end of 2007,” Intel noted. “When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly.”
 
Just before 3:30 p.m. Friday, Intel shares (INTEC) were trading on the Nasdaq for about $23.15, down roughly $0.70 (or 2.9 percent) from previous day’s close of $23.87.
 
AMD stocks (AMD), meanwhile, were trading for about $7.55 on the New York Stock Exchange Friday afternoon, down about $0.23 or 2.8 percent from previous close of $7.78.
 
Mae Kowalke is senior editor for TMCnet, covering VoIP, CRM, call center and wireless technologies. To read more of Mae’s articles, please visit her columnist page. She also blogs for TMCnet here.
 

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