AMD settles lawsuit against Alcatel

Last year, Advanced Micro Devices made a most 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. Terms 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 erode 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-VP, AMD.