Paul,
Check this out:
AMD May Soon Sell Chips To Dell
By David Einstein
Advanced Micro Devices may be about to strike a deal with Dell Computer, the only major personal computer maker that does not use AMD processors.
A source familiar with the companies says that Dell (Nasdaq: DELL - news), the number one PC maker in the U.S., is negotiating to purchase 100,000 chips from AMD (NYSE: AMD
- news) for use in low-cost desktop computers. The chips, code-named Spitfire, are expected to hit the market this summer.
Although just an average-sized sale, such a deal would be one of the biggest coups ever for AMD, the Sunnyvale, Calif., company that for years has played second fiddle to giant Intel (Nasdaq: INTC - news). ``Dell would be
the last bastion to fall to AMD,' says analyst Linley Gwennap of the Linley Group in Mountain View, Calif.
An agreement with Dell would further fuel the momentum that AMD has been building up in the past couple of years, ever since it began to match Intel chip-for-chip in performance. AMD's newest chip, the Athlon, is
considered a match for Intel's flagship Pentium III. And AMD beat Intel to the punch in announcing a chip that breaks the 1-gigahertz speed barrier.
AMD also has overcome production problems which plagued it even when it had the technology to challenge Intel. Those problems caused big PC makers to shy away from AMD in fear that the company would not be able to fill
large orders on time.
``There was concern among some OEMs [original equipment manufacturers] that AMD just wasn't a reliable supplier,' says Gwennap. ``But over the past few quarters, they demonstrated that they have the manufacturing
machinery and that it's running smoothly.'
The momentum has spruced up AMD's financial picture considerably. The company reported record sales of $968.7 million and net income of $65.1 million in the December quarter, citing strong demand in all of its product
groups. And its shares have been on a tear, going from $16 a share in October to a record $60 this week.
One reason why Dell may be in a receptive mood is that the Spitfire is reported to be a better chip, circuit-for-circuit, than the Celeron, Intel's chip for low-cost PCs. Utilizing a faster bus--which routes information in and out
of the chip--the Spitfire is expected to offer ``significantly better performance' than Celerons rated at the same clock speed, Gwennap says.
Not surprisingly, spokespeople for the companies involved have ``We don't comment on rumors and speculation' burned into their brains. But Drew Prairie of AMD says, ``We're always working with those guys [Dell]
because they're the only one of the top ten not offering an AMD-based system.'
Even if Dell is close to coming on board, AMD Chief Executive Jerry Sanders won't be happy until the supply agreement is in writing. That's because Intel could swoop in with a better financial deal for Dell, freezing out AMD
yet again. The memory of that sort of maneuvering is still fresh in the mind of AMD officials, who believe that Intel was able to get Microsoft (Nasdaq: MSFT - news) to choose its chips for the new X-Box video game console
by practically giving them away.
``I wouldn't be surprised if that happens [with Dell],' said Gwennap. ``Intel has been doing that repeatedly to keep AMD from making inroads into its business.'
biz.yahoo.com
Scumbria |
