April 20, 1998, TechWeb News
AMD Reveals A Proactive Approach To Intel Competition
By Kelly Spang
Sunnyvale, Calif. -- Advanced Micro Devices Inc. intends to become more
proactive, instead of simply reacting to Intel Corp.'s moves.
When its product road map unfolds throughout the year, VARs can expect
AMD to go head-to-head with chip-maker giant Intel, Santa Clara, Calif., on
more than just pricing. However, AMD will continue to undersell Intel by at
least 25 percent for similar performing processors, said Jerry Sanders,
chairman and chief executive of the Sunnyvale-based chip manufacturer.
As the chip maker unveils its new family of K6 processors-called the
K6-3D-this quarter, AMD will compete against Intel on performance as well
as price, Sanders said "We're in uncharted water here [with the K6-3D],"
Sanders said during a recent conference call to analysts explaining AMD's
lower-than-expected first-quarter financial results. "This is the first time that
AMD has offered a feature differentiation from Intel."
As an extension of AMD's K6 design, the K6-3D will incorporate multimedia
extensions and support a 100MHz system bus. The first K6-3D introduction
is slated to be a 300MHz chip, scheduled to ship this quarter.
Two weeks ago, AMD rolled out its 300MHz K6 processor, priced at $246
in 1,000-unit quantities, which initially will be incorporated into IBM Corp.'s
Aptiva line.
By the second half of this year, the majority of AMD shipments will be made
up of K6-3D processors, Sanders predicted. And by year's end,
custom-build integrators and VARs will find "dirt cheap" 266MHz processors
to be the entry-level K6 speed, he added.
As AMD departs from its previous reactive stance, its future strategy will be
customer-driven, not Intel-driven, he said.
"That is where the change has come," Sanders said. "We're now talking about
responding to customers as opposed to reacting to Intel. The customers will
drive the direction we go."
The first quarter was rocky for AMD, prompting the company to scale back
its 1998 unit projections from 15 million down to 12 million due to
manufacturing glitches the manufacturer has struggled to fix. As AMD
continues its transition to .25 micron technology, yield problems are largely
behind the company, Sanders said.
"We believe we're now back on the steepest microprocessor ramp in our
history," Sanders said.
In the first quarter of the year, AMD shipped slightly more than 1.5 million
chips and is expected to ship more than 2 million units this quarter, according
to company executives.
Starting in the third quarter, nearly all the processors AMD ships will be
based on .25 micron technology, Sanders said. And more than half of those
units will be 300MHz or faster, he added.
Manufacturing problems were not the only contributing factors to AMD's
first-quarter financial woes. Inventory in the channel and a slowdown in the
semiconductor industry also hurt the company, Sanders said.
For its first quarter, AMD reported a net loss of $55.8 million, or 39 cents
per share, on revenue of $540.9 million. For the same quarter last year,
AMD reported net income of $13 million, or 9 cents per share, and revenue
of $552 million.
Copyright (c) 1998 CMP Media Inc. |
