Antitrust: Intel (INTC), The Next Microsoft (MSFT)

The Financial Times is reporting that EU antitrust authorities are preparing to levy a huge fine against the world’s largest chip company, Intel (INTC). The paper writes that “Some lawyers suggest that the record penalties heaped on Microsoft, which combined have topped the €1bn mark during the course of its long battle with Brussels, could be approached or even exceeded.”

Intel’s problems may only be beginning.

The EU investigation of Intel has been going on for years, and there are similar actions either pending or under way in other countries, including the US.

Intel has had 80% or more of the global market in PC and server chips. Some investigators believe that Intel actively set up illegal arrangements and incentives with hardware companies to use its chips instead of AMD, Intel’s much smaller rival.

AMD has sued Intel in civil court.

The actions could go on for years and may significantly impede Intel’s ability to do business. Like Microsoft (MSFT) before it, Intel may have to alter some of its primary products and how they are marketed.

AMD’s only chance for survival may be getting a big financial judgment from Intel and restraints on the way that the larger company does business. AMD has over $5 billion in long term debt and lost money for most quarters over the last three years.

Douglas A. McIntyre