The European Union on Wednesday fined computer chipmaker Intel Corp. a record $1.45 billion for alleged anti-competitive practices against smaller rival Advanced Micro Devices — a development that should boost plans for an AMD-affiliated chip factory here, officials said.
Intel, which has controlled about 80 percent of the world microprocessor market, called the decision “wrong,” and vowed to appeal.
The Capital Region has a strong interest in Wednesday’s events because of the $4.2 billion factory planned at the Luther Forest Technology Campus that will make chips for AMD.
AMD is the only true rival Intel has in the market for microprocessors, the brains inside computers. AMD had about 22 percent of the market last quarter, an improvement from last year.
Both AMD and GlobalFoundries, which took over AMD’s manufacturing facilities in March, issued statements praising the EU decision.
“Today is an important day for our industry and technology consumers worldwide,” GlobalFoundries stated. “The EU ruling not only supports a competitive marketplace but also helps make the construction of our new facility in New York, and the creation of new advanced manufacturing jobs in the region, a reality.”
GlobalFoundries’ purchase of its 222-acre site on the boundary between the towns of Malta and Stillwater is expected to occur within the next week or two.
There has been skepticism in some circles over whether the factory plans would proceed. AMD has sustained billions of dollars in losses and a dramatic drop in stock price since plans for the plant were first announced in 2006. Much of the speculation has quieted since the formation of GlobalFoundries, a partnership between AMD and an Abu Dhabi investment company to make chips for AMD and potentially other customers.
“From our perspective, opening up the market in a competitive way is a good thing,” said Michael Relyea, president of the Luther Forest Technology Campus. “It makes it more likely GlobalFoundries will be able to sell more chips to AMD.”
The tech campus is currently under construction. GlobalFoundries will be its anchor tenant.
The European Union fine set a record, exceeding the $655 million fine it issued to Microsoft in 2004 for alleged monopoly practices.
After a nine-year investigation, EU officials said in a 500-page decision released in Brussels that Intel broke EU competition law by exploiting its dominant position with a deliberate strategy to keep AMD out of the market.
It said Intel gave rebates to computer manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 computer processing units, or CPUs, from Intel, and paid them to stop or delay the launch of computers based on chips from AMD.
Intel denied doing that.
Regulators said the company also paid Germany’s biggest electronics retailer, Media Saturn Holding — which owns the MediaMarket superstores — from 2002 to 2007 to stock only Intel-based computers.
“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” said EU Competition Commissioner Neelie Kroes. “Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”
Intel President and CEO Paul S. Otellini said the findings ignore exculpatory evidence Intel supplied the commission, and he believes the company will win on appeal.
“When you have a market with basically two players, when one wins, the other loses,” Otellini said in a conference call with reporters. “This is basically competition at work.”
He said the fine will be paid by cash or bond within 90 days and the company will abide by the decision pending its appeal.
There have been other regulatory actions worldwide against Intel, all accusing it of monopolistic practices against its smaller rival.
Regulators in Korea and Japan have found against Intel, and the Federal Trade Commission and the New York state attorney general’s office currently have anti-trust investigations.
AMD has also filed a lawsuit against Intel that is pending in federal court in Delaware, with a trial pending in 2010.
Intel officials said AMD’s market share has in fact grown in the last decade, while there were also innovations in microprocessor technology and the cost to consumers came down.
“Intel’s position is that microprocessors are a highly, highly, highly competitive market and the market has worked well,” said John D’Allesandro, a regional spokesman for Intel.