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Intel reportedly reserved $ 3 billion in 2019 to competitively block AMD
Intel has been reserving 3 billion dollars aside to offer 'discounts' to its customers, and there actually is a photo to back that claim. The recent official unveiling of Cascade Lake X might already the result of that program as the CPUs are selling twice as low per core compared to the chips from Intel's previous generation.
It is Youtube channel Adored TV that explains in a video a slide what exactly Intel would be doing in order to be a stronger party than AMD, and that is injecting money to create discounts that make sure their customers buy intel processors.
It is quite an accusation based on one slide to be honest. If correct, Intel just in 2019 spend three billion US dollars in that program. The money would be used for example for price reductions. Intel names this 3B program the "2019 meet comp discount," Intel's net profit in 2018 was just over USD 21 billion alone. Next to the price reduction on the recent procs, you also need to think bigger. Such money is probably being spent lowering Xeon contract prices to large customers, which has been rumored for some time
The intended effect if the 3B reservation would include price reductions that would make AMD less profitable. According to the slide, Intel in 2019 is to provide ten times as much money for the competition - The slide is labeled " Intel's Scale Advantage ... Financial Horsepower". Even if the accusation was not made directly, if true it is Intel's using its monopoly against the competition.
A disclaimer, the authenticity of the slide cannot be guaranteed. There is currently no evidence of illegal activities nor is it certain that the slides of Adored TV are genuine, or even from Intel at all.
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Intel announced that it has contributed the Thunderbolt protocol specification to the USB Promoter Group. This will enable other chip makers to build Thunderbolt compatible silicon, royalty free. It w...
waltc3
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#5720465 Posted on: 10/14/2019 10:12 PM
They're probably planning on losing at least $3B to catch AMD, is the way I read it. Just retooling their extensive FABs for 7nm will cost billions. They've already ponied up a cool $1B to AMD when they settled their AMD anti-trust suit a few years ago. So, as terms of that settlement, they can't do what they did last time--float Dell for several quarters and pay out lots of money for OEMs to buy Intel instead of AMD--so they won't be doing that again, most likely. But they will definitely have to become the "value proposition" until further notice--they will do as the market dictates as opposed to what they dictate--quite a switch for Intel's management, I imagine.
They're probably planning on losing at least $3B to catch AMD, is the way I read it. Just retooling their extensive FABs for 7nm will cost billions. They've already ponied up a cool $1B to AMD when they settled their AMD anti-trust suit a few years ago. So, as terms of that settlement, they can't do what they did last time--float Dell for several quarters and pay out lots of money for OEMs to buy Intel instead of AMD--so they won't be doing that again, most likely. But they will definitely have to become the "value proposition" until further notice--they will do as the market dictates as opposed to what they dictate--quite a switch for Intel's management, I imagine.
Astyanax
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#5720495 Posted on: 10/15/2019 01:15 AM
Since when is cashback illegal? Not only is it not illegal, as it happens every day in various brands.
For example, when I bought my OLED TV from LG, I had a cashback, It's a promotion like any other.
People are confusing the act of paying/bribing not to use a particular brand and offer a discount/cashback. One thing has nothing to do with the other.
Cashback to end users - good
cashback to mass purchase partners and oem vendors = anti competitive.
Since when is cashback illegal? Not only is it not illegal, as it happens every day in various brands.
For example, when I bought my OLED TV from LG, I had a cashback, It's a promotion like any other.
People are confusing the act of paying/bribing not to use a particular brand and offer a discount/cashback. One thing has nothing to do with the other.
Cashback to end users - good
cashback to mass purchase partners and oem vendors = anti competitive.
sykozis
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Posts: 22421
Joined: 2008-07-14
#5720500 Posted on: 10/15/2019 01:36 AM
G-Sync came to desktops first, but Adaptive Sync was available in laptops before G-Sync was available.
If there are multiple companies competing, and none are trying to lock another out of the market, it's fine. In the case of Intel and AMD, Intel holds a majority of market share and any "cash back" deal could easily be seen as anti-competitive because it would have the potential to prevent the sale of AMD processors to OEMs that AMD would have otherwise gotten. Basically, Intel is limited in what they can do to defend their market position against AMD because of how much market share they have. They can't legally do anything that could prevent AMD from competing.
In the past, Intel offered financial incentives to OEMs that refused to use AMD processors, and punished companies (like Compaq who Intel forced into bankruptcy) that refused to cease the use of AMD processors.
In the case of Intel and AMD, an exclusivity deal would be considered anti-competitive because of Intel's market position.
Correct me if I'm wrong but didn't Nvidia release G-Sync before Free/Adaptive sync were made? If anything, Freesync was the copy.
G-Sync came to desktops first, but Adaptive Sync was available in laptops before G-Sync was available.
Cashbacks happen between corporations all the time. I have a business (nothing to do with computers) and virtually every brand offers it time to time to make the products more attractive.
If there are multiple companies competing, and none are trying to lock another out of the market, it's fine. In the case of Intel and AMD, Intel holds a majority of market share and any "cash back" deal could easily be seen as anti-competitive because it would have the potential to prevent the sale of AMD processors to OEMs that AMD would have otherwise gotten. Basically, Intel is limited in what they can do to defend their market position against AMD because of how much market share they have. They can't legally do anything that could prevent AMD from competing.
In the past, Intel offered financial incentives to OEMs that refused to use AMD processors, and punished companies (like Compaq who Intel forced into bankruptcy) that refused to cease the use of AMD processors.
If the OEM exclusive rumor is true, that still doesn't mean anything. It's no different than the epic store paying for exclusivity. Companies make these contracts all the time. If HP only used Corsair ram under contract, would that upset you?
In the case of Intel and AMD, an exclusivity deal would be considered anti-competitive because of Intel's market position.
Cyberdyne
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#5720506 Posted on: 10/15/2019 02:19 AM
There's a good reason why it's legal though. If it's ok sometimes and not ok other times, you need a concrete way to decide when that is.
When is a company too big to get exclusive deals? Law doesn't like to deal with opinion. Taking action to remain at the top doesn't mean you're being anti-competive. If anything it's overly-competitive.
The factors for monopolization is pretty simple, concrete. If Intel were so aggressive that AMD was at risk of closing shop. Easy.
But AMD is doing great.
There's a good reason why it's legal though. If it's ok sometimes and not ok other times, you need a concrete way to decide when that is.
When is a company too big to get exclusive deals? Law doesn't like to deal with opinion. Taking action to remain at the top doesn't mean you're being anti-competive. If anything it's overly-competitive.
The factors for monopolization is pretty simple, concrete. If Intel were so aggressive that AMD was at risk of closing shop. Easy.
But AMD is doing great.
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Since when is cashback illegal? Not only is it not illegal, as it happens every day in various brands.
For example, when I bought my OLED TV from LG, I had a cashback, It's a promotion like any other.
People are confusing the act of paying/bribing not to use a particular brand and offer a discount/cashback. One thing has nothing to do with the other.
Last time Intel did this, the cashback was contingent on OEMs buying no AMD products, which is illegal. LG didn't make you sign a contract to not buy a competing product in the future for example. Now remember at the time Intel started the practise AMD processors were faster, and cheaper than Intel, but that AMD was capacity constrained and unable to supply more than ~25% of the market. The position it put the OEMs in was 1) either buy the ~25% of their processor demand from AMD and forego the ~30% cashback that Intel offered on the remaining 75% of OEM processor demand, or 2) forego any AMD purchase and get 30% cashback on the 100% of processor demand that Intel could meet.
The end result is that no matter how AMD priced their processors or how competitive they were, they were essentially locked out of the medium to large OEMs because the Intel cashback was conditional on them purchasing no AMD products, and OEMs still had to purchase the majority of their processor needs from Intel to meet their product demand needs. If Intel (like LG) had offered the cashback with no conditions like that, then AMD could have competed on price and captured some percentage of marketshare. Instead they were locked out of the OEM market, significantly impacting their ability to generate the marketshare growth and hence revenue they should have achieved with a higher performing cheaper (unit price) processor.
All that is not to say Intel is doing the same thing again, but it is not unreasonable to worry.