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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: StockMan who wrote (28978)	2/26/1998 7:03:00 PM
From: Maverick	Read Replies (1) \| Respond to of 1574055

The following article explains why the masking step fix is important AMD up on K6 co-production talks--sources Reuters Story - February 26, 1998 14:30 %DPR %US %ELI %ENT %HOT AMD IBM INTC CPQ V%REUTER P%RTR Jump to first matched term By Richard Melville NEW YORK, Feb 26 (Reuters) - Shares in Advanced Micro Devices Inc jumped 10 percent on heavy volume Thursday on talk the company was in negotiations with International Business Machines Corp over the possibility IBM would co-produce AMD's K6 microprocessor chip. According to a source familiar with the talks, IBM and AMD are in "early to mid-stage" negotiations for a deal that would have IBM building chips according to designs specified by AMD. AMD declined to comment, as did IBM, each company citing policies against responding to rumors. A deal would be important for AMD, which has struggled to increase supply amid strong demand for the K6, a low-priced competitor to Intel Corp's Pentium II processor. Several major personal computer companies, including IBM and Compaq Computer Corp have used the chip to trim costs on their lowest-priced models. But AMD has been unable to fully capitalize on the growing popularity of the chip, in part because it is in the midst of a major transition to 0.25 micron production of the processor. In early February, AMD confirmed it had canceled plans to appear at a series of conferences hosted by Wall Street firms and planned to avoid such forums until the company could meaningfully respond to questions related to the transition. Rumors of the talks had circulated among traders on the New York Stock Exchange floor, lifting AMD shares to sharp gains in heavy trading. But some analysts were more cautious in their evaluation of the potential should a deal come to pass, noting that AMD's supply problem could be more complicated than would be solved by a simple addition of capacity. SoundView Financial analyst Scott Randall noted that AMD's production problems stemmed in large part from the fact that wafer yields -- the ratio of usable wafers after processing -- at AMD's plant were too low. "If that's a design issue, you probably won't see a dramatic change with a foundry agreement with IBM," Randall said. "In that case, people looking at this as a magic bullet could be jumping to the wrong conclusion."[This is why the masking step fix by AMD's R&D engineers is important. They are the real heros here] Shares in AMD were up 2-7/8 to 24-5/8 on volume of six million shares in late afternoon activity.