A new economic study issued today by Dr. Michael A. Williams, Director, ERS Group, found that Intel has extracted monopoly profits from microprocessor sales of more than $60 billion in the period 1996-2006. Dr. Williams’ analysis explains why pro-competitive justifications for Intel’s monopoly profits are implausible. 

The key findings were  that consumers and computer manufacturers could gain over $80 billion over the next decade if the microprocessor market were open to competition. The analysis noted that consumers would save at least $61 billion over the period, with computer manufacturers projected to save another $20 billion, enabling them to increase their investment in R&D; create improved products and greater product variety; and provide additional innovation benefits to computer buyers around the world.


Dr. Williams said, “Intel has extracted $60 billion in monopoly profits over the past decade; over the next decade consumers and computer manufacturers would save over $80 billion from a fully competitive market.”

Williams continued, “In light of the recent European Commission decision and prior Japan Fair Trade Commission actions, this analysis asks not whether Intel has engaged in anticompetitive conduct, but how much Intel has gained from the alleged conduct.”

Thomas M. McCoy, AMD executive vice president, legal affairs and chief administrative officer stated, “Intel’s monopoly profits of $60 billion directly contradict Intel’s claim that its business practices have resulted in lower prices – in fact this study shows that billions of dollars have moved straight from consumers’ pockets to Intel’s monopoly coffers.”

McCoy continued, “That $80 billion translates into an Intel monopoly tax on every consumer who purchases a computer. That’s a jaw-dropping figure that helps explain why the European Commission brought antitrust charges against Intel – the real harm that its abuse of monopoly power causes competition and consumers.”

• Intel extracted monopoly profits from the sale of microprocessors of approximately $60 billion in the period 1996 - 2006.
• Pro-competitive explanations for Intel’s $60 billion in monopoly profits are implausible for the following reasons:
  • Recent European Commission charges and prior findings from the Japan Fair Trade Commission;
  • The rarity of firms that achieved a 16-percent or more economic return;
  • An examination of strong companies that have much lower economic returns, including Pfizer, Wyeth, ExxonMobil Corp., and Target;
  • Intel’s reported losses on its non-microprocessor businesses, showing that Intel lacks sustained, competitive advantages from brand-name loyalty and other factors;
  • Negative average economic returns earned by other semiconductor companies.
• Consumers and computer manufacturers would conservatively gain approximately $81 billion in the next decade from full competition in the microprocessor market.
  • Consumers, including both home and business users, would save at least $61 billion.
  • Computer manufacturers are projected to save at least another $20 billion over the next 10 years.
• That represents a consumer savings of approximately 1.5% off the retail price of a $1,000 high-performance desktop computer in a fully competitive market.
• Computer manufacturer savings would result in: (1) increased research and development, (2) greater product variability, and (3) further innovation, providing additional benefits to computer buyers.