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Intel lawsuit could cost billions

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Legal

NTEL, the computer chip giant accused of abusing its market power, could face damages of more than $3.2 billion (€2.66 billion), and see its sales drop by $4.4 billion a year, according to a Wall Street analysis.

Tad LaFountain of Wells Fargo Securities, a division of one of America's biggest banks, has estimated there is at least a 75% probability that Intel will lose the legal case brought last month by Advanced Micro Devices (AMD), its smaller competitor.

LaFountain based his judgment on the detailed specifics of AMD's claim, and on a recent ruling against Intel's alleged anti-competitive practices in Japan.

Intel is one of the biggest multinational employers in Ireland, with 4,800 staff working at its Leixlip campus in Kildare.

The manufacturer - perhaps best known for its Pentium computer chips - had estimated sales of €3.5 billion from its Irish business last year. The Kildare facility is the company's fourth largest manufacturing site overall and the largest outside of America.

Should LaFountain's dismal prognosis for Intel turn out to be near the mark, it could endanger the expected announcement of plans to build Fab 24.2, a €2 billion chip-making plant that is expected to employ up to 500 people. Intel Ireland confirmed earlier this year that it had been gearing up to win the contract by securing planning permission for such a plant.

A final announcement on the location of the new research and manufacturing facility is anticipated by the end of the year. Construction is expected to begin early next year, and be completed within 18 to 24 months.

It is also unclear what the implications would be for Intel's current production facilities in Kildare, particularly its €1.6 billion investment in the latest Fab 24 plant, which is due to come into production next year.

AMD lost market share to Intel between 2001 and 2004 - a time when, in the view of many experts, AMD's microprocessors had established a technological lead over Intel. AMD blames the financial incentives that Intel allegedly offered to computer makers and retailers, causing it to lose business it should have won.

LaFountain has attempted to estimate the loss of sales AMD suffered as a consequence. If Intel is forced to amend its aggressive marketing practices, LaFountain estimates it could suffer a 20-25% fall in its profits - or about $2 billion a year.

In his report, LaFountain wrote: "We believe that the exclusivity that Intel sought with the actions described in AMD's complaint became a drug, and that substituting potentially dubious/questionable/illegal marketing actions for market-expanding product development eviscerated Intel's corporate soul."

Intel has rejected AMD's claim. Chuck Molloy, a spokesman, said LaFountain's estimates "are just back-of-the- envelope guesses and assume a factual basis to the AMD claims that we deny".

Last week, EU competition officials raided Intel's offices as part of its own investigation into AMD's allegations.

Source.

The means justify the end...screw Intel

Got to this a bit late but I gotta say, I hope Intel takes the entire size 12 right up the old chute. I know squat about the deal they are getting hammered with in this article but I do know that Intel has just turned the keys of DRM over to Microsoft. To make matters worse, It would make playing a wmv or many of the video codec driven movies illegal on Linux.....anywhere! Not just in America. I don't have the url here in front of me but google "inquirer intel drm" and its right there on top.

This is scary folks.

helios

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