AMD Files Suit Against Alcatel Business Systems
--AMD says Alcatel in breach of contract on flash memory products--
SUNNYVALE, CA --
AMD announced today that it has filed suit against Alcatel Business Systems seeking damages for breach of a contract under which AMD supplies flash memory products to Alcatel. The suit was filed in the Supreme Court of the State of New York.
AMD and Alcatel entered into a long-term agreement in 2000 under which Alcatel agreed to purchase and AMD agreed to supply flash memory products over a two-year period.
"After several months of negotiation, AMD reluctantly took the step of filing a lawsuit as a last recourse after Alcatel refused to honor its commitments under an agreement that heretofore was hugely beneficial to Alcatel," said Walid Maghribi, senior vice president of AMD and president of the company's Memory Group. "AMD met all of its obligations to Alcatel, passing up opportunities to sell its products to other customers at prices significantly higher than those provided for in the agreement."
Maghribi noted that the agreement was designed to be a 'win-win' proposition for both Alcatel and AMD. "The agreement is eminently fair to both companies in that it assures Alcatel of a continuing supply of flash memory products even when these products are in extremely short supply."
Maghribi said that long-term supply agreements between AMD and its flash memory customers are very important in providing a reasonable basis for investing in production capacity. "Long-term supply agreements benefit both AMD and its customers because they give us some assurance that when we invest billions of dollars in new production facilities, we will have customers for our products. Our customers benefit because they are assured of adequate supplies at reasonable prices, and we benefit by being able to make investments in production capacity based on our customers' needs. In these circumstances, it is essential that both AMD and its customers honor their commitments."
Maghribi also noted that AMD is satisfied with the current status of all other long-term agreements with customers. "Except for Alcatel, all of our other long-term customers have recognized the mutual benefits that result from these agreements," Maghribi concluded.