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Opinion: Setting the record straight on Intel

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5/14/2009 01:00 PM EDT

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gutieaphd
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re: Opinion: Setting the record straight on Intel
gutieaphd   5/14/2009 10:08:27 PM
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I find this EU fine against Intel biased, anti-competitive and an attack to the entire global free trade system. The European Union has, starting in the mid 1990s, engaged massive subsidies to artificially develop the so called ?Silicon Saxony? around Dresden, Germany; an artificial economic development project that is now floundering as most EU and German "investments" of taxpayer money in AMD, Quimonda, Infineon and others are becoming massive and quasi-permanent corporate welfare programs. Just yesterday, those subsidies where once again implicitly extended through the ?Cool Silicon? initiative for Silicon Saxony; perhaps this is the way that our industry will look as Moore?s Law fades away, full of subsidies, overwhelmed by the Law of Diminishing Returns and with government intervening everywhere. AMD (and its newly created spinoff Globalfoundries) has, over the past 10 years, received nearly $3 billion in ?public incentives? from the EU; and a similar amount from the German government and the state of Saxony; and delivered nothing but massive operating losses for the last 11 consecutive quarters, that now exceed $7 billion. Predictably, AMD and Globalfoundries are facing imminent exhaustion of EU subsidies, and are now actively looking to exploit taxpayers elsewhere through similar ?regional development? models based on dysfunctional corporate welfare programs masked as private-public partnerships. (Recently, NY State granted a $1.2 billion in subsidies to AMD and Globalfoundries to partially fund Globalfoundries? Fab 2 in Malta, NY. Just the beginning a long string of public subsidies to companies that simply can?t compete in the marketplace.) It is no surprise that, as Germany and the EU increasingly accept the failure of their "job creating" subsidies in Saxony, the EU Commission accelerated the issuance of fines against Intel because of, according to the EU Commission, Intel has engaged in business practices that in the US are standard operating procedures among most corporations, most of them revolving around manufacturers? incentives, selective rebates, volume discounts and other more or less standard volume pricing practices. Essentially, Intel is accused of practices that is unclear resulted in damage to EU consumers, and quite the contrary, EU consumers received quantifiable benefits through significant product savings; much of those savings subsidized by Intel for the benefit of EU consumers. The EU decision explicitly indicates that citizens of the EU member countries have been hurt by Intel?s business practices; when in reality EU politicians, for nearly 10 years have been hurting their own citizens by dilapidating taxpayers resources in failed corporate welfare programs such as those supporting Silicon Saxony. Ironically, AMD and Globalfoundries, as disclosed in their last 10-Q filing for the quarter ending in March 2009, are engaged in a pricing practice that could just as easily be construed as ?intersegment price dumping? if this practice were to continue following the complete separation of the two companies since one is primarily located in the EU and the other in the US. AMD?s 10Q Filing for Q1?09 shows in ?#6 Segment Reporting? that out of $938M of AMD?s Revenue related to MPUs (Processors), only $283M are being allocated to wafer purchasing from Globalfoundries, which in turn sustains a NET OPERATING LOSS of $298M. Simply said, the price of the wafers being sold by Globalfoundries to AMD is being discounted by at least 50% from real production cost; or that the price per wafer being sold to AMD should be at least double in order to recoup production costs and close Globalfoundries' operating deficit. This decision of the EU is not only an unfair attack on Intel success, but on the entire global free trade system, and an unprecedented act of government meddling in perfectly legal private transactions between willing business partners; the anti-trust action is being enforced for the sole purpose of elevating EU protectionist barriers through the use of subsidies, regionally biased legislation and selective use of anti-trust legislation to promote and protect a failed corporation (AMD and Globalfoundries). These two companies, AMD and Globalfoundries, have elevated to new heights and on a global scale out-of-control lobbying of elected government officers by encouraging the dilapidation of public resources, by systematically creating quasi-conflict of interests involving public servants, by manipulating the media, and even by involving investors whose only qualification is having abundant petro-dollars; all of these practices for the purpose of competing against Intel, a company that has shown superb entrepreneurial execution since its founding, constantly innovating ahead of the competition by boldly extending Gordon Moore?s law, and diligently competing primarily in the marketplace instead of through obscure lobbying of public servants. Intel should appeal this decision not only because is abusive and excessive, but because the future of the global business enterprise based on free trade practices is increasingly in danger, as so many aspects of the anti-trust decision of the EU Commission against Intel clearly exemplify.

Mr. FA
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re: Opinion: Setting the record straight on Intel
Mr. FA   5/14/2009 7:51:59 PM
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Stillwater, Intel is not a monopoly because they charge less than AMD, and the EU is not asking them to charge more for their products. Intel is a monopoly because they force customers into agreements which exclude the customer from selling more than X amount of components and/or computers based on AMD products. Thus AMD can't gain market share no matter how good their product is. You should really read up the issue. It isn't just the EU, Intel has faced and been found guilty of the same behavior in Japan and South Korea, and it'll soon happen in the US as well.

Stillwater0
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re: Opinion: Setting the record straight on Intel
Stillwater0   5/14/2009 7:08:19 PM
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Intel is a monopoly. Monopolies are bad because they overcharge consumers. But Intel has a competitor, so how can they be a monopoly? Because they charge less than AMD can charge to get market share. For this reason the EU wants Intel to charge more than AMD. So how does this benefit consumers and how does it make Intel a monopoly?

Semiconductor Design Engineer
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re: Opinion: Setting the record straight on Intel
Semiconductor Design Engineer   5/14/2009 6:44:47 PM
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Wooo, this article upset a couple of intel fan boys. Let's face it, unfortunately, I don't think the technology sector is immune to the kind of shenanigans our Wall Street financial/insurance industries are in the spot light for these days. After all, they have two things in common: human beings and money.

specee
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re: Opinion: Setting the record straight on Intel
specee   5/14/2009 6:11:41 PM
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All will be forgiven, if Intel, like AMD did, promises to set up a fab in germany or korea or wherever and creates jobs. How pathetic the EU is, and btw, this article is sooo blatantly anti-intel, the author should be ashamed to call himself a journalist

Mr. FA
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re: Opinion: Setting the record straight on Intel
Mr. FA   5/14/2009 4:21:29 PM
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Intel (and many people ^) are arrogant enough to think they've done no wrong. Bottom line, Intel has been cheating to lock it's monopoly into position. It was pretty clear when Intel was beaten 7 years ago with the inferior P4 architecture and AMD steamrolled them with the Athlon 64 architecture that something was going on. It was all too bizarre that the number 1 pc maker in the world refused to sell the superior product. That my friends is a lack of choice for the consumer, driven by Intel's anti competitive practices of paying companies to not use competitors products. They will not win any of these so called "appeals" - pure delay tactic.

TheColin
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re: Opinion: Setting the record straight on Intel
TheColin   5/14/2009 3:45:07 PM
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"Lets be frank." You are assigning guilt before even having read the 542 page document you mention in your opinion piece. You also claim that Intel is a monopolist "with business practices that one would be polite in calling aggressive." Wow. That is brilliant, Sherlock. With opinions that strong, you must be sitting on a mountain of evidence. Either that or you are just hoping that using strong language and shouting it from the rooftop is going to make people believe that what you are saying is true. The fact is, you don't have any more proof or evidence that the rest of the world. Your opinions on this matter are laced with half truths, pseudo-facts and blatant fabrications. But hey, if it supports your opinion then it is fit to print, right?

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