UPDATE 3-Intel hit by NY antitrust suit, kickbacks alleged

* New York's Cuomo alleges pervasive antitrust violations

* NY attorney general accuses Intel of threats, kickbacks

* Intel says will fight charges

* Intel shares up 1.6 pct (Adds comment, details from lawsuit, byline)

By Jonathan Stempel

NEW YORK, Nov 4 (Reuters) - Intel Corp was sued by New York Attorney General Andrew Cuomo, who accused the world's largest chipmaker of threatening computer makers and paying billions of dollars in kickbacks to maintain its market dominance.

The lawsuit accuses Intel (INTC.O) of violating state and federal antitrust law through a "systematic worldwide campaign" of bullying and coercion to monopolize the market for personal computer chips, at the expense of rival Advanced Micro Devices Inc (AMD.N).

Intel's microprocessors power more than 80 percent of the world's PCs. Wednesday's lawsuit comes on the heels of several antitrust probes throughout the world into the Santa Clara, California-based company's business practices.

Cuomo said Intel for several years bribed or coerced computer makers such as Dell Inc (DELL.O), Hewlett-Packard Co (HPQ.N) and International Business Machines Corp (IBM.N) to use its microprocessors or stop using those of rivals.

The alleged wrongdoing included kickbacks in the form of "rebates" and threats of retaliation for using rival chips.

Top officers including Intel Chief Executive Paul Otellini were aware of some of the activity, according to emails cited in the lawsuit filed in federal court in Wilmington, Delaware.

In a conference call with reporters, Cuomo said Intel's "my way or the highway" has corroded competition, while forcing consumers and businesses to overpay for chips.

"We intend to stop them," he said.

The 83-page lawsuit seeks to stop Intel's anti-competitive conduct, and also seeks triple damages and other remedies.

"Consumers have paid more for slower computers and competition has been dampened," said David Balto, a former Federal Trade Commission official who became a senior fellow at the Center for American Progress, a think tank.

INTEL TO DEFEND ITSELF