Quanta Sues AMD Over Microchips for Notebook Computers

Quanta Computer Inc. (2382), the world’s largest contract maker of notebook computers, sued Advanced Micro Devices Inc. (AMD) for breach of contract, alleging the chipmaker sold defective products.

AMD and its ATI Technologies Inc. unit sold chips that didn’t meet heat tolerances and were unfit for particular purposes, Taoyuan, Taiwan-based Quanta claimed yesterday in a federal court filing in San Jose, California. The chips were used in notebooks Quanta made for NEC Corp. (6701) and caused the computers to malfunction, according to the filing.

“Quanta has suffered significant injury to prospective revenue and profits,” the company said in the complaint. Quanta is seeking a jury trial and damages, according to court papers.

AMD, with more than $6 billion in annual revenue, is the second-largest maker (AMD) of computer processors, behind Intel Corp., which has more than $50 billion in annual revenue.

The lawsuit also claims breach of warranty, negligent misrepresentation, civil fraud and interference with a contract.

“AMD disputes the allegations in Quanta’s complaint and believes they are without merit,” Sunnyvale, California-based AMD’s spokesman, Michael Silverman, said in an e-mailed message.

“AMD is aware of no other customer reports of the alleged issues with the AMD chip that Quanta used, which AMD no longer sells,” Silverman said. “In fact, Quanta has itself acknowledged to AMD that it used the identical chip in large volumes in a different computer platform that it manufactured for NEC without such issues.”

Quanta also makes notebooks on contract for Hewlett-Packard Co., Dell Inc. and Acer Inc.

Shares of Quanta rose 1.9 percent to close at NT$64.2 in Taipei today before the news.

The case is Quanta v. Advanced Micro Devices, 12-cv-12, U.S. District Court, Northern District of California (San Jose).

To contact the reporters on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net; Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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