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The U.S. DoJ probes graphics makers for antitrust violations

Both AMD and NVIDIA have received subpoenas from the U.S. Department of Justice Antitrust Division in connection with the DOJ’s investigation into potential antitrust violations related to graphics processors and cards. The root of the AMD subpoena is its recent acquisition of ATI Technologies last month, which was approved according to Canadian antitrust laws.


The DOJ has not made any specific allegations against AMD, ATI, or NVIDIA. Both AMD and NVIDIA said that they intend to cooperate with the DOJ in its investigations.


Together, AMD and NVIDIA hold just over half of the entire graphics market, each with about an equal share. Following the news, NVIDIA shares fell 3.6 percent on Nasdaq trade, while AMD shares fell 2.1 percent on the New York Stock Exchange.

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By ThisSpaceForRent on 12/1/2006 2:03:17 PM , Rating: 2
This investigation makes no sense. AMD and ATI both manufacture completely different products, processors versus graphics chips. The 50% market share is bogus too. Whoever is on the top of graphic card sales changes more often than my underwear. Besides I thought Intel still held like a 90% market share when it came to graphics. That is of course when you consider the market as a whole, and not looking specifically at discrete solutions.

Correct me if I'm wrong, but don't AMD and ATI both offer the cheaper products in their respective markets? What is the DoJ going to do, investigate them for suspicion of price fixing to keep prices low. Those bastards!! How dare they offer me cheaper products.

RE: Seriously?
By Moose1309 on 12/1/2006 2:11:44 PM , Rating: 5
Price fixing is a practice where you agree on minimum price with your competitor. Given the prices for high-end parts recently, I could certainly give credence to the idea that both companies were, em, "cooperating" with each other in deciding what high-end cards should cost. This may be about fixing or something else?

RE: Seriously?
By Chadder007 on 12/1/2006 2:29:47 PM , Rating: 2
So they are possibly going after Video Card makers for Price Fixing???....but not the Oil Companies in the US? Instead they went after Oil companies for "Price Gouging" to which they knew they wouldn't be found guilty of.

Also doesn't Intel have a very large part of the integrated video market?...maybe even more so than both NVidia or AMD?

RE: Seriously?
By patentman on 12/1/2006 2:36:26 PM , Rating: 3
OIl companies were not price gouging, because there is no such thing as price gouging. The fact of the matter is that people can set what ever price they want for a product, but the maximum price they will set is the price the market will bear. Oil cos in the U.S. charged a lot for oil because supply was relatively tight, cost per barrel was up, and people still bought their product.

As for this AMD/ATI/Nvidia thing, the market share aspect of things really doens't seem to have any relavence in this case. Certainly the DOJ would not be going after them for monopoly with only 25% market share each. Another poster was likel right that they are going after something price fixing. Horizontal minimum price fixing is a per se violation of the antitrust laws.

RE: Seriously?
By camped69 on 12/1/2006 3:37:54 PM , Rating: 2
That is crap. What the market will bear is how it's supposed to work. The US is so dependant upon oil that they could charge 10 dollars a gallon and to keep the country running we would have to pay it. The only reason they don't is because it would be extremely evident that they were screwing us. To many it is already obvious what Bush and his buddies from the oil companies are/have been doing. To increase prices due to a "possible" shortage, give me a break. Not to mention the fact that there is no proof that oil does not renew itself. Artificial supply problem. The sooner the human race moves away from fossil fuels the better. Only then will the mega rich be irrelevant and without power as they were before the industial revolution.

RE: Seriously?
By Sunrise089 on 12/1/06, Rating: 0
RE: Seriously?
By duzytata on 12/1/2006 4:57:20 PM , Rating: 2
Actually from 2003 to 2006 Oil Companies profits rose 52%, and that's not including the record breaking profits they posted through out 2006. So that extra $1.50 a gallon would have helped with a lot of problems in my life.

RE: Seriously?
By othercents on 12/1/2006 6:52:00 PM , Rating: 3
That link is Earnings Increase. While they earned more the price per barrel is also higher. The increase should be an equivalently percentage increase compared to the cost per barrel. Even though I believe that oil prices are high they can show the DOJ why their prices are high.

AMD/ATI and NVIDIA can not show why their prices are higher than Intel. This is probably why there is a probe into price fixing. However most technically savvy people understand that GPUs are more complex than CPUs and the high end GPUs should at least cost as much or more than high end CPUs.


RE: Seriously?
By redbone75 on 12/2/2006 7:33:22 AM , Rating: 3
However most technically savvy people understand that GPUs are more complex than CPUs and the high end GPUs should at least cost as much or more than high end CPUs.

Maybe that's how AMD and Nvidia can show the government why their prices are so much higher than Intel's, because Intel doesn't make discrete graphics solutions. I mean, R&D costs money, doesn't it. However, being a consumer, I never felt that $600 for a graphics card was ever justified. If it were absolutely necessary for them to charge that much for a graphics card at initial launch, I would think that they wouldn't really be able to afford releasing a new product as often as they do, at least not until they recoup the costs of development, and I don't see that happening in what, 6 months?

RE: Seriously?
By Sunrise089 on 12/2/2006 1:58:00 PM , Rating: 2
How hard is it for people to try to understand numbers before making a post. If I sell a product for $11 and it costs me $5 to buy it and then $5 to do business (pay my employees, advertise, research new products for the future), my profit margin is 10%. If I raise my price to $12 the next year, that year my profits will have risin 100%. That does not meen I'm making a profit of 100% on the product. I'm actually making a profit of 20%, and that's basically all I can reduce my prices by and not operate at a loss.

Now, let's say I decide I'm going to set my price at a 10% margin on my actual total cost, rather than just deciding to add the dollar to two dollars or whatever. So when my cost is $10, as above, I charge $11. But now say my supplier raises her price to $15, and I still have my $5 additional cost, now I sell my product at $22, and once again show a 100% increase in profits, although I'm making the exact same on each dollar I myself spent. That's the situation the oil companies find themselves in.

RE: Seriously?
By ninjit on 12/1/2006 2:16:37 PM , Rating: 2
... AMD and ATI both..

From your statements, I'm guessing you meant AMD and nVidia?
That's what the article is about, and makes sense since ATI is part of AMD now - and thus AMD DOES produced graphics products now.

Or have you been hiding under a rock recently?

RE: Seriously?
By ThisSpaceForRent on 12/1/2006 3:29:31 PM , Rating: 2
No I meant AMD and ATI. You took the quote out of context. I meant they produce different products in the same way that Mitsubishi makes cars and trucks. The two don't share the same market. Similar products, but different markets. Perhaps I wasn't clear in my original post.

ATI still had the same market share before AMD bought them correct? I thought the investigation was silly in that sense. The market balance is the same as before, just one companies owns market share in two different markets, i.e. graphic chips versus processors.

RE: Seriously?
By othercents on 12/1/2006 6:58:04 PM , Rating: 2
Since Nvidia is also named in the suit with AMD I'm guessing that this suit is about Graphics cards and not CPUs. I don't believe that ATI was named in the suit. ATI does not exist anymore other than a product that AMD produces.

It is very possible when AMD had to release it's records on the AMD/ATI merger there was a red flag between AMD and NVIDIA. It is possible that AMD and NVIDIA where working so close together that now that AMD owns ATI a very close relationship with NVIDIA could be illegal.


RE: Seriously?
By feelingshorter on 12/1/2006 2:30:37 PM , Rating: 2
You dont know what your talking about. Intel has been the top graphics maker for quite a while now. How dare they offer you cheaper products? Sounds like some religious zealot who believes anything anyone tells him. They are COMPANIES who is trying to make MONEY. The only thing public companies need to answer to is their share holders, which is moral. Maby there is price fixing by ATI (AMD ) and nVidia to boost profit. What makes you think not? Are you some gamer that plays WOW all day thinking what your getting is worth what it is? Public companies do what they do to make a higher profit. Remember the antitrust deal back then with Samsung inflating the price? What now? You love those dell monitors which use samsung panels dont you? SURELY they wont scam you. What ever. Im not a gamer but that doesn't and that doesnt make me hate nvidia/AMD (ATI). I just look at it form a $ point of view.

RE: Seriously?
By phil126 on 12/1/2006 3:08:42 PM , Rating: 2
That does not make price fixing any less illegal.

RE: Seriously?
By ThisSpaceForRent on 12/1/2006 3:36:09 PM , Rating: 2
Besides I thought Intel still held like a 90% market share when it came to graphics.

Intel has been the top graphics maker for quite a while now.

So we agree?

I was attempting to use sarcasm with the cheaper products statement. It doesn't always translate well in text, and apologize for the confusion. I'll admit it has been awhile since I've really thoroughly looked at AMD versus Intel, and NVIDIA versus ATI prices. I was making a general assumption about the companies pricing. AMD has usually had the cheaper processors. NVIDIA usually seems to have the more expensive high-end solutions; perhaps I am wrong in regards to the ATI/NVIDIA pricing statement.

RE: Seriously?
By pugster on 12/1/2006 5:07:17 PM , Rating: 2
I agree. It is not like AMD and Nvidia jacking up their prices. Video card's prices go down as new products come in. The government should go after the memory companies because the price of memory seem to go up for the past 2 years.

RE: Seriously?
By Xavian on 12/1/2006 6:05:56 PM , Rating: 3
memory companies have been caught on price fixing before... its not outside the realm of reason that they would try it again.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007
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