ACT and 37 Small Tech Firms Urge FTC To Proceed with Caution on Intel

ACT and 37 Small Tech Firms Urge FTC To Proceed with Caution on Intel

ACT Submits to the FTC a New Analysis of Computer Chip Market and Letter from 37 Tech Firms

Washington – The Association for Competitive Technology (ACT) announced today that it is asking the Federal Trade Commission (FTC) to proceed with extreme caution and avoid any actions that may reduce incentives for innovation or raise chip prices as the agency continues its antitrust review of Intel and computer chip market.  ACT recently presented the Commission a letter signed by 37 members and a new analysis of innovation in the computer chip market and its symbiotic relationship with software innovation.

ACT and its members are particularly concerned by recent reports suggesting that the FTC is still considering antitrust action against Intel despite the recent private settlement between Intel and AMD.

“While competitors and their lawyers can debate the merits of various types of rebate programs, no one is debating the fact that Intel, AMD and others are delivering incredible innovation and value for software developers and consumers. No other industry can match the pace of innovation reflected in Moore’s Law or the rapid price declines that have defined this market for the past forty years.  The FTC must be very careful not to disturb the incentives that have been driving market players to roll out better and lower priced chips every year,” said ACT president Jonathan Zuck.

37 small information technology companies signed onto a letter that was also sent to the FTC urging the consider this matter thoroughly.

“The health and vibrancy of the computer chip market are beyond debate. Therefore, we in the software development community ask government regulators to proceed with extreme caution and avoid any actions that may reduce innovation or lead to higher chip prices,” said the letter.

Software developers like those represented on the petition rely heavily on processor innovation and cost decreases to enable new features and innovations in their own products.  The drastic increases in speed and decreases in price are making ground-breaking new medical, gaming, and animation software possible.

ACT’s report entitled “Exponential Innovation” by Braden Cox and Nora von Ingersleben finds that the computer chip market is incredibly innovative and competitive.

• Innovation Levels Outpace Any Other Industry – The chip industry has kept pace with Moore’s Law, doubling the speed of computer chips every 18-24 months.  From 2000-2008 alone, the speed of the average chip has increased by 28 times.
  
• Chipmakers Continue Massive R&D Investments – Chipmakers spent $45.7 billion in 2007 on R&D and related engineering activities.  With R&D investments greater than 15 percent of sales, chipmakers rank among the top R&D investors in a cross-industry comparison.   In absolute numbers, the semiconductor industry is expected to spend nearly $35 billion in 2009, placing it below the pharmaceutical industry but above the software industry, which includes such R&D heavyweights as Microsoft and Google.
  
• Prices Decrease Faster Than Any Other Industry – According the Bureau of Labor statistics, the quality-adjusted price of computer processors has fallen faster than any other industry in the past decade.  Computing power that cost $2.73 in 1996 cost a penny in 2006, and, from 2000 to 2008, relative processor performance among high-end chips increased by approximately 28 times while the price was cut in half.
  

The full letter can be found here: http://www.actonline.org/documents/091210-act-letter-to-ftc-on-intel.pdf

The full “Exponential Innovation” Report can be found here: http://www.actonline.org/library/act-paper-exponential-innovation.pdf


The Association for Competitive Technology (ACT) is an international education and advocacy group for the technology industry. Focusing on the interests of small and mid-size entrepreneurial technology companies, ACT advocates for a “Healthy Tech Environment” that promotes innovation, competition and investment. ACT has been active on issues such as intellectual property, international trade, e-commerce, privacy, internet policy and antitrust. ACT represents more than 3000 software developers, systems integrators, IT consulting and training firms, and e-businesses from around the world.