AMD CEO sees 'immense' benefit from Intel settlement

Dirk Meyer expects more business for AMD and more choice for its customers

The recent legal settlement between Intel and Advanced Micro Devices will bring new business to AMD and major benefit for its customers, the chip maker said Wednesday.

It will still take years for the chip market to become truly competitive but AMD expects to begin raising its market share immediately, including for notebook CPUs, company CEO Dirk Meyer said at a news conference.

"Our customers will have the freedom to choose AMD like they haven't in the past," Meyer said. "The promise for benefit is immense."

Intel and AMD last month agreed to drop a series of lawsuits including antitrust cases brought by AMD, which had alleged that Intel was using methods such as illegal discounts for customers to boost its market share. As part of the settlement, Intel agreed to pay US$1.25 billion in cash to AMD.

Both that settlement and an antitrust ruling by the European Union against Intel have opened immediate market opportunities for AMD, said Meyer. Without giving names, he listed a European retailer and a company that used to buy only desktop chips from AMD as examples of where added business will come from. AMD expects to get notebook business from the desktop-only buyer, Meyer said.

The European Commission earlier this year fined Intel $1.45 billion for abusing its dominant market position at the expense of AMD.

Notebooks are an immediate growth opportunity for AMD since the company's share in that sector has trailed its share in desktops, but there is no technological barrier for growth in its notebook chips, said Meyer.

"Clearly notebooks are a big target area for us," he said. "All of the growth in our industry is being driven by notebooks. Desktops are essentially flat."

Emerging markets are also a key growth opportunity and China is set eventually to become AMD's biggest market, said Meyer, who was speaking in Beijing.

Another result of the Intel settlement will be a lower AMD stake in GlobalFoundries, the contract chip maker that AMD spun off early this year. Part of the settlement ended a legal battle over whether a cross-licensing agreement with Intel permitted AMD to outsource chip production to GlobalFoundries since it is not an AMD subsidiary. A new agreement will let AMD use any contract chip maker.

"What that means is we can accelerate the pace at which we change the ownership structure of GlobalFoundries," said Meyer. A deal in which GlobalFoundries merges with Singapore's Chartered Semiconductor will reduce AMD's stake in its former manufacturing arm, which is now a joint venture. That could free AMD of the need to include GlobalFoundries on its consolidated financial statements, said Meyer.

AMD has no immediate plans to sell the stake it will still hold in GlobalFoundries after the Chartered deal, Meyer said.

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Owen Fletcher

IDG News Service
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