Nvidia Boss Lashes Out At Intel Over Atom Pricing

Why let AMD have all the fun? In the wake of the European Union's ruling against Intel for anticompetitive practices last week, Nvidia boss Jen-Hsun Huang piled on Monday with an accusation that the computer chip giant is squeezing his company with "unfair" pricing of its Atom central processors for netbooks.

Intel sells Atom processors for $45 apiece on their own but offers a netbook chipset platform that includes an Atom chip and Intel graphics processors for just $25, according to Huang, Nvidia's outspoken CEO. That price scheme is allegedly hurting Huang's Santa Clara, Calif.-based company because Nvidia's own Atom-based motherboard and graphics platform for netbooks and ultrasmall desktop PCs, called Ion, requires computer makers to purchase the Intel-made CPUs at the higher price.

"That seems pretty unfair. We ought to be able to compete and serve that market," Huang told Reuters in an interview published Monday.

Intel was fined $1.45 billion by the European Commission last week as part of an EC ruling that the company was guilty of violating European Union antitrust rules. Intel has disputed the decision and says it will appeal.

The EC ruling and similar decisions by antitrust regulators in Japan and South Korea came about following investigations into allegations against Intel made by its main rival in the CPU market, AMD. While Nvidia, which makes graphics chips but not central processors, is not listed as a claimant in the EC ruling, the company has in the past accused Intel of attempting "to slow the broad adoption of Nvidia platforms and to protect a decaying CPU business."

An Intel spokesperson told Channelweb.com that Huang's claims about unfair Atom pricing were groundless.

"We compete fairly in this market segment as we do in all of our market segments. You can buy Atom processors on their own or with our chip sets. It's up to the OEMs to decide what they want to do," said Bill Calder, an Intel corporate communications manager.

Huang also said that Nvidia isn't planning legal action against Intel over its Atom pricing. "I hope it doesn't come down to that," he told Reuters. Nvidia and Santa Clara-based Intel already are embroiled in a separate legal dispute concerning their 2004 patent-licensing agreement as it pertains to Nvidia's marketing of chip sets for use with Intel processors featuring the chip giant's new microarchitecture, code-named Nehalem.

Industry analyst Roger Kay of Endpoint Technology Associates characterized Huang as "paranoid," but perhaps justifiably so if Intel is trying "to squeeze him out of a lucrative attach market."

"I can't verify Jen-Hsun's claim [on two-tiered Atom pricing]. But Intel's not stupid. If this were really true, all Intel is doing is drawing fire at a time when it doesn't need that scrutiny," he said. Kay said that "while it does seem wrong to price more silicon for less money," he guessed that even at the alleged $25 price point, Intel was pricing its Atom platforms well above the cost to make them and was thus on firm legal footing.

One source close to the fray seized on Huang's reluctance to say that Intel's pricing was legally actionable to claim that Nvidia was being "opportunistic" in light of the EC ruling and "spreading FUD" about Intel. The source, who asked not to be named, said Huang's comments "skirted the line" of accusing Intel of illegal behavior without doing so.

"[Huang is] trying to imply that there's illegal behavior [on the part of Intel]. But this notion that it's somehow unfair or illegal to offer a reduced price for a sale of more silicon is just wrong, so he can't say that outright," the source said.

An Nvidia spokesperson contacted by Channelweb.com said that Huang's remarks were "made in the context of the question" from Reuters and shouldn't be taken as implying anything more than Huang's observations about "an aggressive competitor."