Intel Fined for Illegal Subsidies
By Kim Yoo-chul
Staff Reporter
Intel, the world’s top supplier of computer processing units (CPUs), was slapped with a 26 billion won fine ($25 million) Thursday for subsidizing its Korean clients. The ruling by Korea’s Fair Trade Commission (FTC) came after investigations into the world chip giant’s practices in Europe and the United States.
The FTC said Intel offered rebates to Korean companies in violation of pertinent laws. Official notification will be made in coming months. Intel said that it would appeal.
Chief anti-trust buster Baek Yong-ho said the fine is the second largest ever imposed on a foreign tech company. Microsoft holds the record after it was fined 32.4 billion won in 2005 for bundling software programs.
Baek said that Intel induced Samsung Electronics and Trigem Computer to buy its CPUs, instead of those made by rival Advanced Micro Devices (AMD).
``It is evident that Intel’s share here will fall as the FTC decision will directly hit the brand image of its products,’’ an AMD official said.
``As far as I know, AMD now has the chance to become a key provider of CPUs to Samsung Electronics and Trigem Computer,’’ an unnamed Samsung official said, adding Intel now faces the prospect of a weakened brand image.
Samsung received around $2.5 million in rebates from Intel every quarter between late 2002 and mid-2005 for exclusively purchasing its chips for personal PCs, commission officials said.
AMD provides approximately 15 percent of the chips Samsung uses for personal computers in Korea.
In 2005, Japan advised Intel to rectify such anti-competitive practices.
Separately, the FTC Chairman clarified that the government body will introduce steps to block big companies from profiteering at the expense of medium- and small-sized subcontractors.
``Rising raw material costs have been burdening local smaller firms and one of my top policy priorities is to lessen such difficulties,’’ Baek said in a luncheon meeting with foreign correspondents held in central Seoul.