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Alcatel unfazed by AMD Flash suit

We'll settle out of court, comms company predicts

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Alcatel has expressed its confidence that it will persuade AMD to withdraw the lawsuit the chip maker launched against it on Tuesday.

AMD alleges the French comms equipment company is in breach of contract for wishing to withdraw from a $300 million agreement signed last year to buy Flash memory chips. Whether it found a cheaper supplier or simply found that, what with the economic slump, it didn't need as many parts as it originally thought, isn't clear. Either way, AMD claims it tried to get out of paying the agreed, fixed price.

Alcatel sources say the company entered into talks with AMD to renegotiate the contract to take into account the current market conditions.

AMD's legal action implies those talks broke down. However, Alcatel is sure it can come to an arrangement with the chip maker before the case comes to court. That, plus the fact that AMD has removed from the suit the number of Flash units it was contracted to supply and the price Alcatel agreed to pay, suggests the suit is a bargaining tool as much as anything else. ®

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