Intel is giving away processors for free to Xiaomi, probably violating dumping laws.

Kiyoris

http://www.digitimes.com/news/a20151231PD201.html

"Intel gives Xiaomi special deal on notebook processors.

To strengthen its partnership with China-based Xiaomi in the mobile device market, Intel has provided special deals to the China-based vendor. For every notebook processor Xiaomi purchases, Intel is giving away a free tablet processor, according to sources from the upstream supply chain."

No wonder AMD can't compete.

I don't know the laws in China 100%, but this practice is illegal in most countries, it's called predatory pricing or dumping.

Raxeon

isnt that the same as buy 1 used game get another used game free

zaberfangx

I have AMD my self what I paid for it I'm pretty happy how well it does on the cpu side for the cost.  But damn.

Kiyoris

Raxeon said:

isnt that the same as buy 1 used game get another used game free

I don't think so, dumping becomes a legal issue if it can easily be demonstrated as anti-competitive. Meaning, the dumping is causing a competitor to be competed out of the market. It's hard to make that case for gaming.

Dumping is illegal full stop, but most of the cases where it gets addressed is where someone, often another company, can demonstrate it is directly affecting them and the market.

Intel got a massive billion $ fine for that in the past, the EU agreed with AMD:

filmoret

AMD is losing because they have an inferior product.

bartoni33

filmoret said:

AMD is losing because they have an inferior product.

Obviously. But what OP is talking about is different.

SpottyGekko

Nah, it's OK, as long as there is a Chinese company benefitting from this, all will be well...

Leon1e

filmoret said:

AMD is losing because they have an inferior product.

When AMD had superior product Intel did the same tactic, a tad more predatory at that. 

I don't know if you're part of the brainwashed generation, but pentium 3 and 4 couldn't hold a candle to AMDs CPUs at the time, yet, Intel were outselling them. That was until the Core generation came around. Which changed the game to this day.

This crippled AMD in the long run. 

filmoret

bartoni33 said:

filmoret said:

AMD is losing because they have an inferior product.

Obviously. But what OP is talking about is different.

She did say "No wonder AMD can't compete."  I was answering the reason and it is entirely different then hers.  Intel has paid over a billion dollar fine for doing this and well according to the OP's logic then intel should be losing and not AMD.  Yea but this whole thing is bullcrap.  I mean you can't sell products at cheaper prices because your competitor cant afford to do the same?  That's just bullcrap.

tawess

I am pretty sure it is legal in China to do this. They have a much more cutthroat market regulaton as i have understood it (might be wrong, i am not personally familiar with the subject.) and if not it is most likely a grey area they are exploiting. It is way to public for it to be actually illegal in the region. If it where they would be pulling a Volkswagen instead and deal legit over the table and dirty under it. 

Vrika

Kiyoris said:

I don't know the laws in China 100%, but this practice is illegal in most countries, it's called predatory pricing or dumping.

They might be able to escape anti-dumping laws if the combined price of notebook processor + tablet processor is high enough.

Most western countries also have anti-bundling laws so that you can't use dominant market share in one product (notebook computers) to push up your sales in another product (tablet computers). It looks like China doesn't have similar laws since Intel is doing this.

If China doesn't have any laws against it then Intel is acting correctly. Chinese are allowed to determine their own laws, and Western companies should operate under same rules a Chinese when doing business in China.

Quizzical

filmoret said:

AMD is losing because they have an inferior product.

As compared to Intel's Core processors (Haswell, Broadwell, Sky Lake, etc.), yes.  But that's not what this is about.

As compared to Intel's Atom processors, AMD's "cat" line (Brazos, Kabini, Beema, Carrizo-L) has been clearly superior right from the start.  AMD got considerable market share for that line early on, and then Intel responded by giving away their Atom CPUs for next to nothing.  That makes it awfully hard for AMD to compete, as the "cat" processors are designed for low-budget laptops.

For a number of quarters, Intel reported massive losses on their mobile division.  Finally they restructured how earnings are reported so that Atom isn't reported separately from Core processors.  Is giving Atom away nearly for free illegal behavior on Intel's part?  I'd lean toward "yes", but I'm not a lawyer, and it depends on fine details of what is going on.

Quizzical

filmoret said:

bartoni33 said:

filmoret said:

AMD is losing because they have an inferior product.

Obviously. But what OP is talking about is different.

She did say "No wonder AMD can't compete."  I was answering the reason and it is entirely different then hers.  Intel has paid over a billion dollar fine for doing this and well according to the OP's logic then intel should be losing and not AMD.  Yea but this whole thing is bullcrap.  I mean you can't sell products at cheaper prices because your competitor cant afford to do the same?  That's just bullcrap.

Let's suppose that a company sells both gadgets and widgets.  It costs $500 to produce a gadget, and $100 to produce a widget.  Now suppose that the company sells gadgets for $1000 each and widgets for $50 each.  The company makes so much money selling gadgets that they're still very profitable, even though they're losing a bunch of money on widgets.

Now suppose that you're some other company trying to make money by producing widgets.  It costs you $100 to produce a widget, too.  But now that your competitor is selling widgets for $50--even though their widgets are no cheaper to produce than your own--how are you supposed to make money?

That's roughly the fix AMD is in with their "cat" processors.  It's also the sort of thing that laws against anti-competitive practices try to ban.  Is Intel technically in violation of the laws?  I don't know.

The real problem for AMD is that their higher end CPUs (their "gadgets" in the above example) are so bad.  If AMD's high end CPUs were just as good as Intel's, Intel wouldn't be so able to make tons of money on their higher end CPUs and use that to subsidize losing money on their low end.  Zen can't come soon enough.

Intel would argue that the proper competition for Atom is not AMD but ARM.  And that they're losing badly to ARM, and have to give away their product cheaply to try to get some market share.  There's a good argument for that in cell phones and a weaker one in tablets, but that completely falls apart in laptops.  Where it gets messy is that laptops might well use the same physical chip as tablets.

Ridelynn

Just goes to show that Intel has to give away their low power line to get it used. There competition there is really ARM, not so much AMD. Intel is trying to charge between $20 and $70 for one of their low power CPUs (Atom line), when they aren't bundling it with a high margin Haswell or Skylake CPU that has that much in profit to cover. ARM, on the other hand, you can get starting well under $1, and even at the higher end your looking in the $5 range. For a device that's currently being sold with an extremely tight margin, that's a huge price difference for not-that-much difference in performance.

They can easily get around "dumping" laws. Sure, maybe you can't give away the second product, but you could enter into an arrangement where it's at a seriously reduced price, such that the sum total is the same as it would be if it were free... It's all just numbers on a spreadsheet, they will just finagle them until it meets the law.

reeereee

Kiyoris said:

http://www.digitimes.com/news/a20151231PD201.html

"Intel gives Xiaomi special deal on notebook processors.

Chinese companies get special deals all the time just for being Chinese companies.  To get into the Chinese market you have to partner with a Chinese company that will skim almost all your profits and try to steal your business secrets. 

When I hear someone talking about Chinese companies getting "special deals" my first though is it's more than likely part of the extortion you have to pay for access to their market rather than anything to do with dumping.

SEANMCAD

Kiyoris said:

Raxeon said:

isnt that the same as buy 1 used game get another used game free

.. if it can easily be demonstrated ...

and that is the rub not only in wording but in reality. usually anti-dumping doesnt even register on the radar as something to care about unless it affects an entire national economy.

I know in the U.S. when we created some such laws it was  specific to a product or industry that was causing large scale economic problems.

I can assure you if it was easy to instigate, the U.S. would have already done so around oil prices by saudis dumping oil in our markets in a very openly stated motive to end fracking in the US

Ridelynn

The Chinese have done it with solar panels, and continue to do it today. The government subsidized solar production sufficient enough to bankrupt several US companies (Solyndra was the most infamous) - which by most opinions was their intent - drive out the competition while the market is getting established, and by the time their competition was gone, they would have the experience and economy of scale to maintain the low price without the subsidies any longer.

That plan seems to have worked. Once the foreign competition was pretty much gone, it turned into Chinese vs Chinese manufacturers. Now many of the Chinese manufacturers have went bankrupt as well, but they did develop the economy of scale and managed to push out all but the largest foreign competition. China has mostly stopped their subsidies and loan guarantees. PV installation costs continue to fall, but at a much slower rate than they did when it was very obvious China was dumping money into the industry. Seven of the top ten solar PV manufacturers are located in China today.

The US did institute Anti-Dumping policy. They raised the import tariffs for Chinese panels last year. But it was too little too late. With almost all of the largest manufacturers located in China now, you almost have to use a Chinese product if you want to install PV, and raising the tariffs too much will kill off the renewable market that the US is still trying to grow (they did renew the Investment Tax Credit for solar, the US subsidizes 30% of a solar installation). And the price for PV now has hit commodity level, so unless you already are in the manufacturing game, it's extremely difficult to jump in and be profitable, at least without some sort of technological advancement to reduce the cost per watt or increase the power density.

So there is one case where a government instituted Anti-Dumping, but it was pretty useless in doing anything. China is much more drastic about it though, and since they write their own laws, it's anyone's guess as to what they may do about it if they perceive it will harm Chinese interests. China didn't even allow foreign gaming console manufacturers into the country until recently, fearing the competition with domestically produced units. It wasn't until it became obvious last year there was no domestic competition that they lifted the ban.

SEANMCAD

Ridelynn said:

The Chinese have done it with solar panels, and continue to do it today. The government subsidized solar production sufficient enough to bankrupt several US companies (Solyndra was the most infamous) - which by most opinions was their intent - drive out the competition while the market is getting established, and by the time their competition was gone, they would have the experience and economy of scale to maintain the low price without the subsidies any longer.

That plan seems to have worked. Once the foreign competition was pretty much gone, it turned into Chinese vs Chinese manufacturers. Now many of the Chinese manufacturers have went bankrupt as well, but they did develop the economy of scale and managed to push out all but the largest foreign competition. China has mostly stopped their subsidies and loan guarantees. PV installation costs continue to fall, but at a much slower rate than they did when it was very obvious China was dumping money into the industry. Seven of the top ten solar PV manufacturers are located in China today.

The US did institute Anti-Dumping policy. They raised the import tariffs for Chinese panels last year. But it was too little too late. With almost all of the largest manufacturers located in China now, you almost have to use a Chinese product if you want to install PV, and raising the tariffs too much will kill off the renewable market that the US is still trying to grow (they did renew the Investment Tax Credit for solar, the US subsidizes 30% of a solar installation). And the price for PV now has hit commodity level, so unless you already are in the manufacturing game, it's extremely difficult to jump in and be profitable, at least without some sort of technological advancement to reduce the cost per watt or increase the power density.

So there is one case where a government instituted Anti-Dumping, but it was pretty useless in doing anything. China is much more drastic about it though, and since they write their own laws, it's anyone's guess as to what they may do about it if they perceive it will harm Chinese interests. China didn't even allow foreign gaming console manufacturers into the country until recently, fearing the competition with domestically produced units. It wasn't until it became obvious last year there was no domestic competition that they lifted the ban.

It would be in the best interest of my personal investments if the US Goverment did that now regarding Saudi dumping oil to end fracking as they have explicitly said they are trying to do.

having said that, by all the market economy moral systems we learn in school if you can end your compeition by nearly going bankrupt yourself in trying I dont see how that violates in 'ethics of business' by any stretch of the imagination.

l2avism

SEANMCAD said:

Ridelynn said:

The Chinese have done it with solar panels, and continue to do it today. The government subsidized solar production sufficient enough to bankrupt several US companies (Solyndra was the most infamous) - which by most opinions was their intent - drive out the competition while the market is getting established, and by the time their competition was gone, they would have the experience and economy of scale to maintain the low price without the subsidies any longer.

That plan seems to have worked. Once the foreign competition was pretty much gone, it turned into Chinese vs Chinese manufacturers. Now many of the Chinese manufacturers have went bankrupt as well, but they did develop the economy of scale and managed to push out all but the largest foreign competition. China has mostly stopped their subsidies and loan guarantees. PV installation costs continue to fall, but at a much slower rate than they did when it was very obvious China was dumping money into the industry. Seven of the top ten solar PV manufacturers are located in China today.

The US did institute Anti-Dumping policy. They raised the import tariffs for Chinese panels last year. But it was too little too late. With almost all of the largest manufacturers located in China now, you almost have to use a Chinese product if you want to install PV, and raising the tariffs too much will kill off the renewable market that the US is still trying to grow (they did renew the Investment Tax Credit for solar, the US subsidizes 30% of a solar installation). And the price for PV now has hit commodity level, so unless you already are in the manufacturing game, it's extremely difficult to jump in and be profitable, at least without some sort of technological advancement to reduce the cost per watt or increase the power density.

So there is one case where a government instituted Anti-Dumping, but it was pretty useless in doing anything. China is much more drastic about it though, and since they write their own laws, it's anyone's guess as to what they may do about it if they perceive it will harm Chinese interests. China didn't even allow foreign gaming console manufacturers into the country until recently, fearing the competition with domestically produced units. It wasn't until it became obvious last year there was no domestic competition that they lifted the ban.

It would be in the best interest of my personal investments if the US Goverment did that now regarding Saudi dumping oil to end fracking as they have explicitly said they are trying to do.

having said that, by all the market economy moral systems we learn in school if you can end your compeition by nearly going bankrupt yourself in trying I dont see how that violates in 'ethics of business' by any stretch of the imagination.

US government has no power to regulate prices on a global market.
US laws do not apply to Saudi Arabia. In fact, only OPEC has any influence but not much.

As far as china, if the units were being sold to the Chinese company by a company owned by Intel and not Intel itself (as is common for tax avoidance reasons to keep the income overseas were it won't be taxed) it would not fall under the jurisdiction of US law. (This is how CocaCola avoided problems when its subsidiaries in Columbia were using private security forces to murder union members in its bottling plants- or how companies like CocaCola and IBM did business with the Axis and Allied powers during WW2)

Ridelynn

It may come to US intervention in oil, although I doubt under this administration. I agree, that's exactly what OPEC is trying to accomplish. Although i don't think it will work as well as it has for the Chinese - the Middle East is too dependant on oil, and they are hurting themselves just as bad as they are hurting the larger companies that are drilling for oil via more expensive methods (fracking, tar sands, etc). They are betting they can get global oil market to shift before their countries go into open revolt, and I don't know that I would make the same bet or not, given the stability in the region.

@l2avism is sort of correct - we can't dictate OPEC or Saudia Arabia, but that doesn't mean we can't influence global economics. THe US can adjust their duties and tariffs (as they did with Chinese Solar), and they have no small amount of influence through the WTO. And there are much less subtle shows of power too, like parking aircraft carriers in a region, or influencing surrounding governments.

However, this is a bit off topic of MMOs or hardware.

mgilbrtsn

I would have to look at the law involved with dumping.  It's a lot more complicated than the simple term implies.

13lake

Kiyoris forgot to mention that on top of bundling, the laptop processor is heavily discounted as in giving it away dirt cheap(which is awesome for what xiaomi's vision is). Lets see if Xiaomi can release $900 worth of laptop for $450, they did it with their phones.

SEANMCAD

are we kinda off topic here and turning this debate into who is right or wrong on the example used instead of the debate itself?

Quizzical

Oil isn't a good comparison, as there, everyone can produce whatever they produce, and then prices go wherever they go.  As you have to make the decision on which oil wells to drill years before you have the oil available to sell, you don't know prices yet.  Once you've got the oil, you kind of have to sell it rather than just sit on it.  Guessing wrong on what prices will be and therefore how much to produce is why oil has so many fluctuations in prices.  That demand for oil is relatively inelastic (if gas prices doubled, would you immediately stop driving?) makes the price fluctuations so wild.

Crude oil is a commodity with basically a single worldwide price.  If oil were selling for $100/barrel and Saudi Arabia decided to sell their oil for $50/barrel, speculators would buy it and resell it at $100/barrel.  Increasing supply does lower equilibrium prices for everyone, but what producers really choose is the amount they produce, not the price at which they sell it.

fodell54

filmoret said:

bartoni33 said:

filmoret said:

AMD is losing because they have an inferior product.

Obviously. But what OP is talking about is different.

She did say "No wonder AMD can't compete."  I was answering the reason and it is entirely different then hers.  Intel has paid over a billion dollar fine for doing this and well according to the OP's logic then intel should be losing and not AMD.  Yea but this whole thing is bullcrap.  I mean you can't sell products at cheaper prices because your competitor cant afford to do the same?  That's just bullcrap.

I don't know where you live but it's done every single day in the US. Years ago I used to work in sales and it is a very common practice. I would sell something for 100's if not 1000's of dollars (in some cases) cheaper then the competitor because I could. Happens all the time.

Kiyoris

filmoret said:

 I mean you can't sell products at cheaper prices because your competitor cant afford to do the same?  That's just bullcrap.

You can sell things cheaper than your competitor.

What you can't do is heavily discount your products for specific markets, under your domestic price and you can also not sell them under the price it costs to produce them.

There's a very good reason for this, if they allowed that to happen, any big multinational could just gob up market competitors by undercutting them at a loss, until the competitor dies, and raise prices after they cornered the market.



If I sell orange juice on an orange juice stand, Intel with its billion in cash reservers, could just come into my market, and sell orange juice at a loss. I can not compete with that, I can't give my orange juice away at a loss, it costs money to buy the oranges and electricity to turn them into juice, I would go bankrupt. That's where anti-dumping laws come in, I am protected from those type of practices, and Intel will be forced to sell their oranges at least at the cost needed to produce them, they will be forced to raise prices by law, making me competitive again.

Dumping is anti-competitive, Intel isn't competing with me when they dump orange juice under cost, they're not competing with me on taste or on service, they're just undercutting the market, destroying local orange juice stands, because of their massive cash reverses.

Anti dumping laws mostly protect the underdog in a market, that's why big multinationals don't like them. The laws ensure a fair market for the smaller local company.



What is also illegal in many markets is something called "tying". Basically tying is using one product as leverage to sell another.