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  (Source: Funny Crave)
The chips in question are a half decade old, but this one could get ugly as both companies play the blame game

Advanced Micro Devices, Inc. (AMD) celebrated a relatively good 2011.  It kept competitive in the graphics market and saw good sustained sales.  It built up graphics hype going into 2012, with December's soft launch of its Tahiti mega-GPU.  And on the CPU side of the coin it managed to finally get Bulldozer out the door and saw its budget-priced Fusion GPU+CPU earning strong sales, becoming one of 2011's biggest CPU success stories.  Overall AMD earned over $6B USD in 2011, a solid (and profitable showing), even when its mprimary competitor, Intel Corp.'s (INTC), $50B USD annual haul is brought into the picture.

I. AMD's Older Integrated Graphics are Dying in NEC's Notebooks

But trouble is on AMD's doorstep and she's come a-knocking.  The chipmaker has been hit by a lawsuit by Taoyuan, Taiwan-based Quanta Computer Inc. (TPE:2382), a juggernaut of the laptop/tablet industry.

Quanta is a company most people haven't heard of but there's a good chance you own a product built and co-designed by them.  It serves as the original design manufacturer for much of the laptop lineup of Hewlett Packard Comp. (HPQ), Apple, Inc. (AAPL), Dell, Inc. (DELL), Sony Corp. (TYO:6758), and Toshiba Corp. (TYO:6502), to name just a few.  It takes these companies designs and tweaks them to bring the laptops to life in production form.

Returning to the suit, Quanta alleges that AMD sold it defective chips for a series of laptops it made for Japanese computermaker NEC Corp. (TYO:6701).  AMD won the integrated graphics contract on the laptops and sold Quanta integrated versions of its older Radeon Xpress X1250 GPUs -- under the codename ATI RS600ME.

RS600ME
The RS600ME, in the wild [Image Source: Essence Technology]

(Check out this blast from the past as we discuss an AMD/Quanta Dell design win half a decade ago, around when the IGP in question came out.)

In its court filing Quanta accuses AMD of engineering negligence, saying it didn't pay attention to heat issues, resulting in the chips dying.  The lawsuit throws a laundry list of civil code at AMD, accusing it of breach of warranty, negligent misrepresentation, civil fraud, and interference with a contract.  

Quanta gripes, "Quanta has suffered significant injury to prospective revenue and profit."

II. AMD Blames Heat Deaths on Quanta

Heat is a common problem when it comes to laptop computer designs, as highlighted by the roasting one Intel Corp. engineer gave Apple over its laptop overheating woes following his presentation at Intel's 2011 Intel Developer Forum (IDF).

AMD refutes the accusations vigorously.  AMD's California-based spokesman released a brief statement commenting, "AMD disputes the allegations in Quanta’s complaint and believes they are without merit.  AMD is aware of no other customer reports of the alleged issues with the AMD chip that Quanta used, which AMD no longer sells.  In fact, Quanta has itself acknowledged to AMD that it used the identical chip in large volumes in a different computer platform that it manufactured for NEC without such issues."

The latter remark hints at what AMD's angle in the case may be.  It will likely argue -- and correctly so -- that other lineups that used this particular embedded chip did not suffer the vast overheating issues that the NEC lineup did.  It could use this to argue that the failures were attributable to a packaging issue (Quanta and/or NEC's fault), rather than a chip design one.  Of course, it all comes down to exactly what kind of engineering specifications AMD agreed to when it signed on the dotted line and what kind of temperatures were actually experienced in the NEC notebooks.

NEC Ultrabook chick
Like Apple, NEC is fond of tight form factors (i.e. the "ultrabook"), that tend to make it run hot. [Image Source: TechTicker]
 
The case is an unfortunate turn of events for AMD as it offers the company a load of negative publicity, over what is a very old product.  The merits (or lack thereof) of AMD's more recent designs obviously have little to do with a five year old product that first launched in Aug. 2006 (for Intel chipsets).

For that reason, if AMD manages to prevail, don't be surprised if it smacks Quanta with a counter-suit for some sort of corporate equivalent of libel/slander.

That said, while the case may not reflect much on the AMD of present, aside from the negative publicity, angering Quanta could be a damaging move for AMD.  Quanta controls a large share of the world's laptop supply.  While money has a way of mending broken fences (i.e. if AMD outprices Intel, Quanta may still pick AMD, even if the pair isn't getting along well), the deteriorating relationship between the top chipmaker and top ODM could spell trouble for AMD, particularly when it comes to the awarding of contracts where it comes close in price performance to its chief CPU rival Intel or chief graphics rival NVIDIA Corp. (NVDA).

Editor's Note:
We've reached out to AMD for more details on what major notebook lines this IGP has appeared in and engineering-specific questions, such as whether the suggested heatsink and thermal diode (see datasheet; PDF) were applied to the design in question, as well as what the exact thermal specifications are (which are contained in a thermal datasheet that does not appear to be publicly available).

Source: Bloomberg





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