AMD Pushes Ahead With 'High-Risk' Move To 0.25 Micron
By Mark Boslet
Dow Jones Newswires -- January 13, 1998
SAN FRANCISCO (Dow Jones)--Advanced Micro Devices Inc. (AMD) posted a
fourth-quarter loss smaller than what Wall Street expected and continued to push ahead in its high-stakes effort to wrest a share of the microprocessor market from Intel Corp. (INTC).
The Sunnnyvale, Calif., chip maker lost 9 cents a share, significantly less than the 14-cents-a-share loss analysts had forecast. The company lost 15 cents a share in the year-ago fourth quarter.
Advanced Micro Devices, or AMD, also shipped 1.5 million of its new generation K6 microprocessor, which represented a 50% increase from the third quarter, even if those shipments fell short of the 2 million the company hoped for at the start of the fourth quarter.
The company's production yield - using 0.35 micron technology - at its Fab 25 in Austin, Texas., still isn't what AMD wants, Chief Executive W.J. Sanders III said on a conference call with analysts.
But the company will push forward with its strategy to rapidly convert that production to more advanced 0.25 micron, which will produce faster chips, Sanders said.
It is a "high-risk strategy" converting at such a quick pace, but one that is worth the risk, he said. AMD projected on the conference call that the majority of its production at Fab 25 would be at 0.25 micron by the end of the first quarter.
But because of the technical challenge converting to the smaller circuit size, Sanders declined to estimate production volumes for the first quarter. He also said it would be difficult to project when volumes would be high enough to bring the company back to profitability.
During the fourth quarter ended Dec. 27, AMD said it shipped its first
microprocessors at 0.25 micron - 266 megahertz desktop and 233 megahertz laptop models. But the chips were produced at a Sunnyvale plant and not at the high-volume Fab 25.
On the conference call, AMD went on to say that its plans to ship its K6 3D chip with 3D technology in the second quarter were on track. The product is code named Chompers.
Efforts to construct a Dresden, Germany, chip plant to produce the next generation K7 chip also were on schedule, the company said. AMD plans capital spending of between $700 million and $750 million on the facility in 1998. K7 products are expected in 1999.
In response to an analyst's question, AMD also said it has not sold a fully operational K6 chip below $75. Some followers of the company had speculated prices had dipped below the $75 level.
For the quarter, AMD reported revenue of $613.2 million, up from $496.9 million a year ago. Sales of nonmicroprocessor products were down 2% during the quarter, but the product group was profitable. |
