AMD settles lawsuit against Alcatel

Last year, Advanced Micro Devices (AMD) made an unusual move in suing a major

customer for failing to purchase the number of chips it was supposed to under

the terms of a long-term supply contract. This week, AMD said it had reached a

settlement with France's Alcatel. However, the terms of the agreement were not

disclosed.

In early 2000, AMD and Alcatel Business Systems, a wholly owned Alcatel

subsidiary that makes cell phones, signed a two-year SRAM memory chip supply.

When demand for cell phone started to decrease late last year, Alcatel refused

to take delivery of the SRAM chips for which it has no use.

AMD sued claiming that the discounts it provided Alcatel in return for a

two-year supply contract deprived AMD of the opportunity to sell its chips at

much higher prices in 2000 when the market for SRAMs was hot.

Although no terms were announced, the settlement apparently includes Alcatel

continuing to purchase Flash memory chips from AMD. "We are pleased with

the terms of the settlement and look forward to cooperating with Alcatel

Business Systems to produce high quality Alcatel mobile phones containing AMD's

Flash architecture," Walid Maghribi, senior vice president of AMD and

president of the company's Memory Group.