Intel, Advanced Micro Compete for Customers at Computex Show
2006-06-05 20:36 (New York)

By Young-Sam Cho and Tim Culpan
     June 6 (Bloomberg) -- Intel Corp. will make a pitch for
loyalty from its customers at the biggest gathering of chip
buyers in Asia, after slumping to its lowest market share this
decade. Advanced Micro Devices Inc. will call on them to defect.
     The two California-based chipmakers square off today in
Taiwan, the world's largest producer of liquid crystal displays,
notebook computers and motherboards. The venue: Computex, where
35,000 customers including Dell Inc. and Hewlett-Packard Co. are
slated to attend.
     Intel's market value has dropped 31 percent since Chief
Executive Officer Paul Otellini succeeded Craig Barrett last year,
as the company lost Dell as an exclusive customer and forecast
its first annual sales decline since 2001. Otellini plans new
chip designs to fend off Advanced Micro's advances in Asia, the
world's largest and fastest-growing chip market.
     ``There's a lot of requests from consumers for AMD,'' K.Y.
Lee, chairman of Benq Corp., a Taiwanese notebook maker, said in
an interview yesterday in Taipei. ``Performance-driven customers
prefer the AMD chips.''
     While Benq buys most of its central processor units, the
main chips that interpret and execute instructions in a computer,
from Intel, the Taipei-based company is increasing orders of
Advanced Micro chips, Lee said.
     Shares of Intel, this year's worst performer in the Dow
Jones Industrial Average, have fallen since May 18, 2005, when
Otellini, 55, took over as head of the Santa Clara, California-
based company. Shares of Sunnyvale-based Advanced have risen 90
percent during the period.

                          Sales in Asia

     This week, Intel's Anand Chandrasekher, vice president of
sales and marketing, will be pitching the company's Viiv chips,
which are designed to help computers play movies and music.
Advanced Micro President Dirk Meyer will be holding a press
conference to promote its rival product, AMD Live.
     For Intel, sales in Asia, including Japan, rose 25 percent
last year, outpacing the 5.9 percent growth in Europe and the 4.9
percent decline in the U.S., according to Bloomberg data. Asia
accounted for 50 percent of Intel's revenue in 2005, compared
with 21 percent in Europe and 20 percent in the U.S.
     Advanced Micro's sales surged 82 percent in China and 97
percent in South Korea, offsetting the 45 percent decline in
Japan, according to Bloomberg data. Sales rose 13 percent in
Europe and 16 percent in the U.S. last year. Combined sales in
China, Japan and Korea overtook Europe as the company's largest
source of revenue during 2004.
     Taiwanese companies made 30 percent of the world's desktop
computers, 82 percent of laptops, 98 percent of motherboards, and
72 percent of LCD monitors last year, according to Taiwan's
Institute for Information Industry.

                            AMD's Rise

     In the U.S., Advanced Micro dealt a blow to Intel in May,
when Round Rock, Texas-based Dell said it will use the company's
processors in some server machines, ending its 22-year exclusive
use of Intel chips. Intel's share of computer processor chips
fell to 74 percent during the first quarter, the lowest this
decade, according to estimates by Mercury Research.
     The agreement with Dell gave Advanced Micro, which supplies
chips for companies such as No. 2 PC maker Hewlett-Packard Co.
and International Business Machines Corp., a foothold in the last
major PC maker that isn't using its microprocessors.
     Advanced Micro Chief Executive Officer Hector Ruiz has
raised the company's market share to more than 20 percent for the
first time in more than four years. With the Opteron chip,
Advanced Micro began selling faster semiconductors that can
process data in 64-bit chunks as well as 32 bits, more than a
year ahead of Intel's Xeon chip.
     Advanced Micro said last month it will invest $2.5 billion
to increase production from its two German factories.
     Intel's Otellini has responded to Advanced Micro's gains by
saying he will introduce a new fundamental chip design every two
years. Otellini will probably regain some of the lost market
share as long as Intel beats Advanced Micro in markets such as
India and China, investors such as Victor Shih said.

                           `Key Market'

     ``Sooner or later, Intel probably will get back some of the
market share,'' said Shih, who manages the equivalent of about
$300 million at HSBC Asset Management Taiwan in Taipei. Asia is
``the key market for the future, especially those emerging
markets like China and India.''
     Visitors to Computex this week will see the unfolding battle
as soon as they step off the plane. Above the immigration desks
at Taipei's Chiang Kai-Shek International Airport adorns a garage
door-sized advertisement that says Intel's chips ``will change
the way you see the world.''
     Inches on the left is Advanced Micro's own billboard
proclaiming itself as the ``technology leader.''

--With reporting by Theresa Tang in Taipei and Ian King in San
Francisco. Editor: Teo (stj)

Story illustration: See {INTC US <Equity> ANR <GO>} for a chart
of analysts' recommendations on Intel. To chart Intel's earnings
against estimates, see {INTC US <Equity> SURP <GO>}.
To chart Intel's share price, see {INTC US <Equity> GP <GO>}.
To chart AMD's share price, see {AMD US <Equity> GP <GO>}.
See {TTOP <GO>} for the day's top technology-related news. Click
{NI SHOW <GO>} to read more stories from conferences.

To contact the reporters on this story:
Young-Sam Cho in Taipei at (886) (2) 7719-1542 or
ycho2@bloomberg.net
Tim Culpan in Taipei at (886) (2) 7719-1541 or
tculpan1@bloomberg.net

To contact the editor responsible for this story:
Teo Chian Wei at at (886) (2) 7719-1536 or
cwteo@bloomberg.net

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-0- Jun/06/2006 00:36 GMT