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Cash starved AMD's chief lashes out at "monopolist" Intel

IT Industry - Market

Two years ago Hector Ruiz was talking about grabbing 30% market share in the computer processor space. Today the AMD CEO, in the midst of a company cash squeeze and a plummeting share price, is bitterly complaining about the "monopoly" held by its larger rival and Silicon Valley neighbour Intel.

In an interview with Gulf News , after the announcement that Abu Dhabi investment company Mubadala had bought a US$622 million stake in AMD, Mr Ruiz blamed Intel for using its market clout in an attempt to squeeze AMD out of the action.

Mr Ruiz also claimed that AMD had been responsible for all of the major computing technology innovations in the past five years, while none had come from Intel, the company that invented the microprocessor.

In addition to being trumped by Intel, which has bringing new high performance products to the market over the past 18 months, AMD has had cash flow issues partially stemming from its US$5.4 billion acquisition of graphics processor maker ATI in July 2006, of which AMD shelled out US$4.2 billion in cash.

The cash investment of Mubadala is being viewed by some analysts as a financial rescue package of sorts and the company's share price is sitting at US$9.76, just off its 1 year low, after plummeting 30% since mid-November. AMD shares reached their peak of US$42 January 2006 and have been on a steady decline since March 2006.

Intel announced its successful Core 2 Duo processor in July 2006 and has been on a steady incline since then, rising more than 50% from around US$17 to its current price of US$26.08, which is near its 1 year high of US$27.54.

Complicating matters is that the US economy may well go into recession next year, which would impact the bottom line of both chip companies. However, the much larger and better resourced Intel is in a infinitely better position to withstand a market downturn and could even capitalise by weakening AMD's position further.