Jan. 10 (Bloomberg) -- Intel Corp., the world's largest maker of computer microprocessors, and competitor Advanced Micro Devices Inc. were subpoenaed by New York Attorney General Andrew Cuomo in an antitrust probe of computer chip pricing.

New York is investigating whether Santa Clara, California- based Intel violated federal and state laws by coercing customers to exclude Advanced Micro, the second-largest chipmaker, from the worldwide market for the product.

``Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation,'' Cuomo, the state's top law enforcement officer, said today in a statement. ``We will also look at whether Intel abused its power to remove competitive threats or harm competition.''

The subpoena follows similar probes in Europe and South Korea. Intel asked European Union regulators Jan. 7 for a hearing over allegations that it illegally used rebates to wrest sales away from Advanced Micro. The European Commission, the EU's antitrust authority, accused Intel in July of abusing its dominance to exclude its chief rival.

In September, South Korea's Fair Trade Commission claimed that Intel was abusing its dominant market power in that nation.

``We'll work very hard to comply with the requests in the subpoena,'' Chuck Mulloy, a spokesman for Intel, said of the New York probe. ``We believe our business practices are lawful.''

Dominant Position

Intel abused its dominant position in the $33 billion microprocessor market by encouraging customers to avoid dealing with its only rival, Advanced Micro claimed in a 2005 lawsuit filed in a Wilmington, Delaware, federal court. Intel has denied any wrongdoing.

Cuomo's subpoena seeks information on whether Intel penalized customers, primarily computer manufacturers, for purchasing x86 computer processing units from competitors. All personal computers now run on so-called x86 chips, and account for over $30 billion in annual worldwide sales.

The subpoena also seeks data on whether Intel improperly paid customers for exclusivity and illegally cut off rivals from distribution channels, according to Cuomo's statement.

Michael Silverman, a spokesman for Advanced Micro, said his company also received a subpoena in the Cuomo probe.

``We have no problem with monopolies,'' Silverman said. ``When monopolies illegally leverage their power to maintain that monopoly position, authorities have an obligation to step in and insure the market functions normally.''

15 Percent

Intel fell 21 cents to $22.54 in Nasdaq Stock Market trading. Advanced Micro rose 43 cents to $5.96 in New York Stock Exchange composite trading.

Advanced Micro has lost investors as it prepares to report its fifth-straight loss. The company has had to cut prices to compete with Intel and its stock lost 26 percent this year before today, following a 63 percent slide last year.

Intel fell the most in three years Jan. 4 after its rating was cut for the second time in three days as analysts said there may be declining demand for PC components.

U.S. Senator Charles Schumer of New York today urged the U.S. Federal Trade Commission to investigate the matter.

``Antitrust investigations into Intel are springing up everywhere except Washington,'' Schumer said in a statement. ``The FTC needs to stop looking the other way on Intel and start getting serious about enforcing antitrust law.''

Federal Trade Commission

In August, Schumer and Representative Kirstein Gillibrand, also of New York, sent a letter to the FTC asking the agency to investigate Intel's alleged anticompetitive practices.

Advanced Micro's Silverman said the agency has begun an informal investigation.

FTC spokesman Mitchell Katz declined to comment. In September, the agency said in a letter that Schumer's concerns were receiving ``careful consideration.''

Intel, which will report its fourth-quarter performance Jan. 15, had a 15 percent increase in sales and a 38 percent jump in profit in the third quarter on stronger demand for laptop computers. Net income dropped 42 percent in 2006 when it lost share to Advanced Micro in the profitable market for the chips that run server computers.

At the end of the third quarter, Intel had 76.3 percent of the worldwide market for personal computer microprocessors by units, little changed from the year earlier period, according to Framingham, Massachusetts-based IDC, a market researcher. Via Technologies Inc. had 0.3 percent and Advanced Micro the rest.

Advanced Micro is considering whether to build a $3 billion chip plant in Saratoga, New York, Silverman said. It has until July 2009 to notify New York officials of its decision.

To contact the reporter on this story: Karen Freifeld in New York State Supreme Court at kfreifeld@bloomberg.net.

Last Updated: January 10, 2008 16:49 EST