AMD Opts for Two-Front War

AMD(AMD) has stepped up its battle with Intel(INTC) in recent years, focusing mainly on improving its competitive position via technology and manufacturing.

Now, AMD has turned to the court system for help.

Sunnyvale, Calif.-based AMD sued its larger rival Tuesday, alleging global coercion of 38 large-scale computer makers, small-system builders, wholesale distributors and retailers across three continents. AMD said that Intel illegally inflated computer prices and limited choices for businesses and consumers, and it says Intel has an illegal monopoly because of its actions.

The 48-page suit, filed in Delaware, failed to move either company's stock, but the case does represent a new strategy for AMD. Whether it's a good one or not remains to be seen.

Legal matters can drag on for years despite hopes for an imminent conclusion (see Rambus(RMBS)). Also, while one party may emerge a winner in the courtroom, it doesn't mean it will take a victory lap in the business world.

"AMD's approach is based on throwing everything but the kitchen sink at Intel in the hopes of getting something to stick," said analyst Hans Mosesmann with Moors & Cabot in a morning research note. "This move may actually weaken AMD's case, given that some of the examples provided of coercion seem to us as business as usual in the semi industry; which may take the punch out of legitimate acts where Intel may have crossed the line."

AMD seems to have chosen now to pursue its case because of a recent ruling by the Fair Trade Commission of Japan, which found that Intel violated its antimonopoly act. Piling on top of that, AMD has cited numerous other occasions in which Intel has allegedly wielded unfair influence on its customers. AMD even cited Apple's(AAPL) decision earlier this month to switch its processor platform from IBM(IBM) to Intel.