AMD's K6 shipments may approach millions by Q4, company says at forum
Business Wire - May 19, 1997 19:35
FINANCIAL ADVANCED-MICRO-DEVICES AMD CALIFORNIA COMPUTERS ELECTRONICS COMED V%BW P%BW
SAN JOSE, Calif.--(BUSINESS WIRE)--May 19, 1997--Advanced Micro Devices Inc. (NYSE:AMD) said Saturday that it is ramping up production enabling the company to manufacture and sell "millions" of its new K6 chips by the end of calendar 1997.
Analysts have predicted AMD could sell up to 5 million of its K6 chips before year end. AMD Investor Relations Manager Toni Beckham wouldn't confirm the analysts' projections except to say it would likely be in the millions. "That could mean 2 million. That could mean 5 million. I'm not saying," she said.
Beckham made her remarks at the Informed Investors Semiconductor Forum May 17 in San Jose. Beckham told Forum attendees that, for the first time, AMD is on par with industry powerhouse Intel Corp. (NASDAQ:INTC) in a roll out of Pentium-class chips. In the past, AMD has been years late bringing competitive chips to market.
"About 10,000 of the K6 chips were shipped in the first quarter, hundreds of thousands will be shipped in the second quarter, and millions will be shipped in the second half," Beckham said in response to a question. "We don't give you these numbers as a forecast, but just to give an idea of how fast we are ramping production of K6."
Among the highlights of her presentation and in the Q&A, Beckham said:
-- In the current quarter, AMD expects to announce contracts for K6 chips with one or two top-20 PC makers, with one of them in the top 10.
-- Pricing for the K6 will stay about 25% less than the competing Pentium product of equivalent performance.
-- AMD's die for K6 chips is smaller than Intel's Pentium chips which enables AMD to produce chips at lesser cost than Intel.
-- AMD expects to ship 266MHz chips in the third quarter and 300MHz chips by the fourth quarter.
-- AMD is making a major push into the flash memory market and, as the low cost producer, is gaining market share.
Also, Beckham said AMD doesn't expect Intel to materially cut prices on the new Pentium II and Pro chips. "For every dollar we lose if Intel cuts pricing by a dollar, Intel loses $9. It's not in their best interests to do that," Beckham said.
Dr. Gerald Fleming and C.B. Lee, semiconductor industry analysts with Sutro & Co., agreed with Beckham that Intel likely would not cut pricing to compete with AMD's K6. The analysts also indicated that if AMD can smoothly execute its strategy to roll out K6, the company has some advantages over Intel. Nonetheless, they added, Intel will remain the dominant player even if AMD's strategy works and it gains market share as the industry grows.
"Frankly, AMD has a better design, a smaller die size, on their new devices," said Fleming. A smaller die enables AMD to produce more chips on a silicon wafer and could give AMD some cost advantages.
In an hour-long session, Fleming and Lee discussed their current views on the semiconductor industry. They also offered comments on a number of companies, including Cyrix (NASDAQ:CYRX), ADE Corp. (NASDAQ:ADEX), Atmel Corp. (NASDAQ:ATML), Bay Networks (NYSE:BAY), Novellus (NASDAQ:NVLS), LSI Logic (NYSE:LSI), Lam Research (NASDAQ:LRCX), VSLI Technology (NASDAQ:VLSI), Veeco Instruments (NASDAQ:VECO) and several others.
A complete set of tapes of the Forum is available for $25, which includes shipping, handling and postage.
Informed Investors, based in Sacramento, has been providing investment education to individual investors since 1993. For information, call 800/992-4683.
CONTACT: Informed Investors Inc.
Tim Quast/Bob Taylor/Steve Chanecka, 916/448-8222
or 800/992-4683
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