The contract in question is an agreement, signed between the two companies in 2000, under which AMD agreed to supply Alcatel with flash memory chips over a two-year period, according to a statement from AMD.
Flash memory chips are commonly used in cellular telephones and other electronic devices which need to retain data in memory even when power is disconnected. This type of agreement is common in the electronics industry because it usually guarantees sales to the manufacturer while also assuring a supply and a acceptable price for the buyer.
Filing of the lawsuit, at the Supreme Court of the State of New York, came after several months of negotiation and as a last recourse "after Alcatel refused to honor its commitments under an agreement that heretofore was hugely beneficial to Alcatel," Walid Maghribi, senior vice president of AMD and president of the company's memory group, was quoted as saying in the statement.
"AMD met all of its obligations to Alcatel, passing up opportunities to sell its products to other customers at prices significantly higher than those provided for in the agreement," he said.
A spokesman for Alcatel was not immediately available for comment.
AMD has several other such agreements in place with customers and is satisfied with the current status of them, it said. Late last year company officials said similar agreements were in place with companies including Cisco and Samsung Electronics.