Toshiba, which ranks fourth in the global PC market, expects to save at least 10% in parts-procurement costs by buying the chips from AMD, confirmed a Toshiba US spokesperson.

As such, its AMD-powered notebooks, which are slated for release in July, will retail for as much as $82 less than their Intel-powered counterparts, said the Toshiba spokesperson. A spokesperson for AMD in the US declined to comment on pricing or other terms of the deal.

Those will be mid- to high end-range notebooks powered by AMD Turion 64 dual-core microprocessors, said the AMD spokesperson. Turion 64 dual-cores are the top-end of AMD’s mobile processor range. They come in various models ranging from 1.8GHz to 2.3GHz.

Toshiba also will buy AMD M690 series graphics chipsets, which AMD acquired when it bought ATI Technologies

AMD declined to comment on whether its antitrust lawsuit against Intel had any bearing whatsoever on Toshiba’s move to buy its chips. We are just very pleased to have Toshiba come on board as customer, said the AMD spokesperson. Comment beyond that need to be answered by Toshiba.

Toshiba did not discuss the lawsuit in relation to the deal.

Among its allegations in its original complaint against Intel, filed in June 2005, was that Intel used illegal methods to exclude AMD from the global notebook market. AMD alleges Intel coerced Toshiba and others to buy only Intel chips. [Intel’s] exclusive deals with Dell, Sony and Toshiba alone bar AMD from a third of the world market and half of US domestic sales, said AMD, in its complaint.

Dell has since struck a deal to buy AMD chips, breaking a more than two decade-long practice to use only Intel microprocessors.

In its 2005 lawsuit, AMD alleged Toshiba, like Sony, was once a significant AMD customer but, but also like Sony, Toshiba received a very substantial payment from Intel in 2001 not to use AMD processors. Toshiba thereupon dropped AMD.

What’s more, alleges AMD’s complaint, Toshiba execs agreed that Intel’s financial inducements amounted to cocaine, but said they were hooked because reengaging with AMD would jeopardize Intel market development funds worth between $25m and $30m per quarter. Toshiba made clear to AMD that the tens of millions of dollars of additional marketing support was provided on the explicit condition that Toshiba could not use AMD microprocessors, read AMD’s complaint.

Our View

AMD’s legal action against Intel aside, this deal may not be as good for AMD as it first seems. If Toshiba can save as much as 10% on parts-procurement by using AMD chips then it seemingly follows that AMD is selling its wares at a cut-rate price compared to Intel.

Because the companies won’t discuss pricing terms, it is impossible to say for sure. But if AMD is selling its highest-end notebook chips at a bargain price then the company isn’t living up to its promise to compete with Intel on features and not just price.

Of course, competing on price is a sound strategy, but against its much larger rival it’s a strategy that may not serve AMD in the long run.