Quanta sues AMD for selling defective chips

Quanta has filed a lawsuit against AMD, alleging the chipmaker sold defective products. World's largest contract maker of laptops claims AMD and its ATI division sold chips that caused notebooks to malfunction because they didn't meet heat tolerances and were unfit for particular purposes.

AMD spokesman Michael Silverman says his company disputes Quanta's allegations and believes they are without merit. In an e-mailed message to Bloomberg, Silverman states AMD is aware of no other customer reports of defective chips, and points out that Quanta has itself acknowledged to AMD that it uses the identical chip in large volumes in a different computer platform that it manufactured for NEC without such issues.

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.

Source: Bloomberg