Intel antitrust settlement will change how it prices, markets chips

A plant of the U.S. chip maker Intel Corp.

TEXT OF STORY

Steve Chiotakis: Intel today will announce that it has settled a major antitrust case with the Federal Trade Commission. The world's biggest chipmaker is accused of shutting smaller rivals out of the market and keeping chip prices unfairly high. Now the U.S. isn't Intel's only antitrust critic, but today's deal would be a major milestone for the company. Marketplace's Mitchell Hartman is with us live this morning to explain. Good morning, Mitchell.

Mitchell Hartman: Good morning, Steve.

Chiotakis: So do we know what the company has agreed to do to get the government off its back?

Hartman: Well the FTC will hold a press conference in a few hours to lay it out. Previous reports have suggested that Intel probably won't pay a significant fine, but the settlement with the Federal Trade Commission is sure to require Intel to change the way it markets and prices the chip to computer makers. The end result could be lower costs for thsoe computer makers, which could in turn mean lower prices for you and me.

Chiotakis: And what was Intel, Mitchell, was was it accused of here?

Hartman: Oh, depends on which of Intel's critics you're talking about. There have been so many. Intel settled a major lawsuit brought by Advanced Micro Devices, last year, paying that company $1.25 billion. It has faced suits in South Korea and New York state. It's still fighting a $1.5 billion antitrust fine
from the European Union.

Chiotakis: But it still doesn't answer the question: What got Intel into this trouble?

Hartman: Well basically, the charges all boil down to:= bullying and paying off computer-makers so that they would only use Intel chips. And also sabotaging competitors' attempts to make their chips work with Intel. Intel has 80 percent of the world market in CPUs; it's got more than half of the graphics market. So it's a big deal; if you're a smaller chip developer -- and everyone is smaller than Intel, of course -- and you can't get your chip, your stuff to work with Intel's stuff, that's a big problem. What the FTC settlement to be announced today will do for Intel is clear away a big antitrust headache. It'll also set rules for more fair competition in the chip market, might lead to lower prices and more innovation going forward.

Chiotakis: Marketplace's Mitchell Hartman, reporting live. Mithcell, thanks.

Hartman: You're welcome.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...