Xy,
And the world takes notice!
Profits
FINALLY, SOME COMPETITION
AMD and others are making a legitimate run at Intel.
By Luc Hatlestad
The chip wars are over, right? Intel won. End of story.
Not so fast. Led by Advanced Micro Devices (AMD), second-string x86-based semiconductor makers like Cyrix and Centaur have recently
scored partnership deals that suddenly make Intel seem vulnerable--if
only slightly.
AMD announced in January that Compaq Computer will use AMD processors in all of its sub-$1,200 consumer desktop PCs and that IBM's Aptiva systems will run on AMD's 233-MHz and 266-MHz K6 chips.
Meanwhile, Cyrix, which recently merged with National Semiconductor, is supplying chips to Compaq for use in some Presario notebook PCs, and Centaur, a subsidiary of Integrated Device Technology, is marketing an x86 clone for sub-$2,000 multimedia notebooks.
An AMD spokesman attributes the Compaq and IBM deals to the low prices
of AMD's K6 chips, a crucial factor in a PC market with constantly
shrinking margins. "We're offering a very compelling value proposition
because our chips are 25 percent cheaper than comparable Pentiums," he
says.
Linley Gwennap, the editor of Microprocessor Report, adds that the K6 is "a good chip, solid all around" and says Compaq has been itching to move away from Intel because of ongoing disputes between the two over PC branding. "Compaq has been begging to use something other than Intel for a while, because it wants to brand its computers with 'Compaq' rather than 'Intel Inside,'" he says. "This deal is a sign from Compaq that it believes AMD has left its production problems behind."
Those problems were a primary cause of AMD's net losses of $31.7 million and $12.3 million in the last two quarters of 1997. On the bright side, the latter number beat analysts' projections for the fourth quarter, during which the company met its goal of producing 1.5 million K6 chips.
The increase to 15 million chips annually--the approximate number Compaq and IBM will use in their machines--is to be made possible by AMD's move from 0.35-micron manufacturing processes to 0.25-micron processes. The measurements refer to the distance between transistors on a chip, and switching to 0.25 micron means AMD will get up to 340 usable chips per 8-inch wafer instead of the current 180 yielded at 0.35 micron. Also, production will be boosted by AMD's new manufacturing facility in Dresden, Germany, scheduled to open in 1999.
Intel may still be at the helm of the semiconductor ship, but AMD's
recent wins are a challenge to that position. |
