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December 18, 2009

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FTC's new lawsuit puts Intel under stress

THE Federal Trade Commission piled on new antitrust charges against Intel Corp on Wednesday, seeking to end what it described as a decade of illegal sales tactics that have crippled rivals and kept prices for computer chips artificially high.

The FTC's lawsuit contains the most wide-ranging allegations yet against the world's largest chip maker, which is also fighting a record US$1.45 billion antitrust fine in Europe and cases in South Korea and New York state.

It comes despite Intel having recently settled similar complaints brought by rival Advanced Micro Devices Inc, whose lobbying of regulators led to their charges. In its 2005 lawsuit, AMD quoted a manager from Toshiba Corp comparing Intel's payments for not using AMD's chips to "cocaine" and an executive from Gateway complaining that Intel's threats of retaliation for working with AMD beat them "into guacamole."

If the FTC prevails, the case could have a broad impact because it concerns two key markets that are dominated by Intel, instead of just one in the other cases.

The FTC is raising new charges of manipulation in the market for graphics processing units, or GPUs, which primarily handle video and other images. Until now, Intel has faced allegations only regarding central processing units, or CPUs, which are the "brains" of personal computers.

Intel owns about 80 percent of the worldwide CPU market, with AMD commanding virtually the rest. Intel also has more than half of the graphics chip market, though rivals Nvidia Corp and AMD's ATI division dominate the market for standalone graphics chips, whereas Intel's graphics capabilities are baked into its "chipsets," which connect the main processor to the rest of the computer.


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