AMD-backed Study: Intel Raked In $60B In Monopoly Profits

Intel extracted "monopoly profits" of more than $60 billion from microprocessor sales between the years 1996 and 2006, according to a summary of an economic study that appeared on Intel rival AMD's Website this week.

The study was conducted by Dr. Michael A. Williams, director of economic and financial consulting firm ERS Group. The ERS Group is an economic and financial consulting firm retained by O'Melveny & Myers LLP, outside counsel for Intel's main rival, AMD, in a pending anti-trust case in Delaware.

The summary, posted Thursday on AMD's Web site, claimed that a number of key findings in the study showed that "[p]ro-competitive explanations for Intel's $60 billion in monopoly profits are implausible."

According to the summary, the study took into consideration anti-trust charges and findings against Intel in Europe and Japan, Intel's lack of "sustained, competitive advantages from brand-name loyalty", negative economic returns by other semiconductor companies in contrast to Intel, and other factors.

If Intel were to end its alleged monopoly practices, the summary claimed, "Consumers and computer manufacturers would conservatively gain approximately $81 billion in the next decade from full competition in the microprocessor market."

An Intel spokesperson said the publication of the summary was part of a PR campaign by AMD and that the timing of it was "puzzling."

"Our view of it is that it is wildly speculative and based on assumptions that are at the very least incomplete. It seems to me that it's designed to generate additional PR following the EC complaint. " said Intel spokesperson Chuck Mulloy.

The European Commission (EC) issued a formal anti-trust complaint against Intel last Friday. Intel now has nine weeks to reply to the EC's preliminary complaint, which charges the world's leading chipmaker with fixing rebates and making direct payments to OEMs to discourage the building of AMD-based products, as well as offering below-market prices on server chips.

Intel denied any wrongdoing in a statement released Friday, emphasizing that the EC complaint had come about due to filings by its rival AMD rather than consumers or other objective interests.

AMD has been on a PR offensive since the EC decision came down, going so far as to take out full page advertisements trumpeting the revelation of "the truth about Intel" in Tuesday's editions of the New York Times, Wall Street Journal and other major Metro dailies.

"The timing of the release of this quote-study-close-quote is a bit puzzling, because in the U.S. case, discovery isn't even completed. It's after discovery is completed that you engage so-called experts. Eventually what will happen is that as the U.S. case moves along, there will be in-depth analysis by economists on both sides," said Mulloy, referring to the Delaware case.

"This goes to show you that if you pay someone enough money you can get them to say almost anything."