The Japan offices of Intel, the world's biggest maker of computer chips, were raided by the country's fair trade watchdog yesterday over allegations that the firm had pressured PC manufacturers not to install chips made by rivals.
The fair trade commission is investigating claims that Intel used questionable methods to persuade Japanese clients to select its Intel Inside central processing units rather than those made by its main rival in Japan, Advanced Micro Devices (AMD), and other firms.
Local media reported that Intel had offered large discounts on its products as a sweetener and allegedly threatened to stop supplying chips to clients who refused to play along.
The officials raided three Intel locations in Japan, including its head office in Tokyo. They are also understood to have visited the premises of AMD and several consumer electronics firms.
"We did get visits from the Japanese FTA, and, as is our normal practice, we attempt to the best of our ability to cooperate with authorities," Intel spokesman Chuck Mulloy told Reuters from the company's headquarters in Santa Clara, California.
Intel, which developed the first microprocessor in 1971, dominates the global market for chips used in PCs, servers and other devices.
Its CPUs are found in four out of every five PCs sold worldwide. In Japan - the third biggest PC market in the world, after the US and China - 85% of all computers contain Intel chips. Last year, Intel racked up $30.1bn in sales, an increase of 13% from 2002, and recorded net earnings of $5.6bn. Nine per cent of its revenues came from sales in Japan, compared with 27% from the US and 24% from Europe.
It has been a busy year for Japan's fair trade watchdog. Six weeks ago, it raided the Tokyo offices of Microsoft for allegedly trying to strong-arm Japanese computer firms into agreeing in advance not to sue the software group even if it incorporated their patented technology into its Windows XP operating system.
The raids are seen as evidence that the Japanese authorities are more willing to act to protect domestic consumer electronics manufacturers against predatory behaviour by the two US companies.
Intel's business practices have attracted the attention of regulators in other parts of the world. The US federal trade commission carried out a three-year investigation into the firm but ended it in September 2000 without taking action.
A European commission investigation, launched in 2001, ended abruptly when charges of anti-competitive practices were either dropped or found to be baseless.
