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To: AK2004 who wrote (4627)	2/27/1998 9:05:00 PM
From: Joey Smith	Read Replies (1) \| Respond to of 6843

Kumar not positive on AMD, to say the least... IBM deal no panacea for AMD By Michael Kanellos Staff Writer, CNET NEWS.COM February 27, 1998, 12:30 p.m. PT news analysis While a new manufacturing alliance with IBM will certainly help Advanced Micro Devices (AMD) meet demand for its K6 processors, a number of hurdles remain in the path to greater acceptance. Chief among these is the question of whether more major computer vendors can and will expand the market for AMD technology. AMD already has deals with Compaq and IBM to supply chips to their respective low-end consumer models, but although these relationships could expand, neither company has committed to using the K6 in the lucrative business PC segment. Other major manufacturers appear unwilling to adopt the chip. Moreover, Digital, one of AMD's larger vendors, will likely dissolve its computer division when that company gets merged into Compaq. The deal will most probably serve as a way for AMD to gain valuable manufacturing technology, which will see the light of day in 1999. "Hewlett-Packard is definitely not going to be rushing toward it. Dell? Never. Gateway? Doubtful," said Ashok Kumar, semiconductor analyst with Piper Jaffray. Executives at HP and Dell have previously echoed such sentiments. Further, the IBM-produced K6 chips won't be geared for profit. The K6 costs about $40 for AMD to produce, but the same chip will cost around $50 at the IBM factory and will have to sell for around $75, said Kumar. The processors will be hitting the market at about the same time arch-rival Intel releases a high-performance, low-cost Pentium II chip, code-named Mendocino, which will sell for around $110. K6 processors are on par with high-end Pentium and mid-range Pentium II processors in performance. The deal seems likely to give AMD's manufacturing technology a strategic boost. This quarter, AMD shifted more of its manufacturing to the 0.25-micron process, an additional hurdle that even AMD has said will not be easy to master. While AMD's success or failure with mass manufacturing chips on the 0.25-micron process won't be known for a few weeks, IBM has resources that will help the company improve these transitions, said Kumar. Manufacturing processes that yield smaller circuits allow AMD to produce faster chips. Smaller processes, however, are difficult to achieve. AMD will eventually move its 0.25 process to a smaller 0.18 process. The Sunnyvale, California-based chipmaker will be shifting to the 0.18-micron technology for its next-generation K6 "3D +", due in mid-1999. AMD has failed over the past few quarters to manufacture Intel-compatible K6 processors in the quantities that PC vendors demand. The problems have centered around the company's inability to produce sufficient number of high-performance chips, which are in higher demand than the low-performance chips that are in greater supply. This in turn has prevented the company from taking market share away from Intel. Intel is an investor in CNET: The Computer Network. A shift to IBM could not only boost production of the chip but, maybe more important, improve manufacturing efficiencies, referred to as chip "yields," also a thorn in AMD's side. "They are a reasonably large [chip] supplier and have a propensity to manufacture for others," said Mark Edelstone semiconductor analyst for Morgan Stanley. "It will have limited impact in 1998," he said prior to the announcement. More of the impact would occur in 1999. The agreement with IBM spans two years. According to AMD, IBM is expected to begin making the chips starting in the third quarter. Interestingly, IBM has a history with the K6 although it only started inserting the chip in its own computers late last year. IBM served as the chip foundry for NextGen, which AMD acquired in early 1996; NextGen's processor became the basis of the first K6 chips. IBM has also been making the packaging, the plastic shell that surrounds the microprocessor core and is synonymous with the look and feel of the chip, for the K6.

To: AK2004 who wrote (4627)	2/27/1998 9:38:00 PM
From: James Yu	Read Replies (1) \| Respond to of 6843

Albert, Here is a good news and we will see the so called "bah bah bah..." experts to say... AMD, IBM Ink Two-Year K6 Production Deal SUNNYVALE, CALIFORNIA, U.S.A., 1998 FEB 27 (Newsbytes) -- By Craig Menefee, Newsbytes. Advanced Micro Devices [NYSE:AMD] has turned to IBM [NYSE:IBM] for help making AMD-K6 microprocessors. The two-year foundry agreement was announced Friday morning by AMD. IBM plans to commence with K6 wafer starts in the third quarter of this year, AMD said. Volume retail shipments of devices using the IBM-built K6 processors will begin sometime in the fourth quarter, if all goes as planned. "It'll be just in time for Christmas, which could work out to be a great deal," remarked AMD's Scott Allen, speaking with Newsbytes. AMD said IBM will "somewhat augment" the AMD Fab 25 chip-making plant in Austin. The plant has received wide coverage because of AMD's seeming inability to eliminate stubborn yield problems there. Low yields caused the firm to miss its 1997 production targets and reportedly delayed some deliveries. Retail channels hate that. Asked if those problems had influenced AMD to sign the foundry deal, Allen said AMD won't discuss the state of its Fab 25 plant until the next quarterly report, due April 7. Of the current deal, Allen declared: "This is a straight foundry deal that increases K6 capacity. It enables us to satisfy demand and advance K6 in the marketplace." Despite yield problems, AMD beat analysts' predictions in mid-January by posting only a $12.3 million loss on $613.2 million revenues. Its last quarterly revenues grew by 23 percent over the same quarter in 1996 and units shipped were reportedly up even more. IBM spokesperson Bill O'Leary told Newsbytes the K6 chips will be produced in the firm's primary production fab in Burlington, Vermont, which has established a very good history with quarter-micron chips. He said the IBM-made AMD chips are not slotted for IBM products, even though the firm has announced several K6-based Aptiva consumer PCs (Newsbytes, August 19, 1997). "Where the processors go will be strictly up to AMD," O'Leary added. O'Leary told Newsbytes that adding K6 production to the Burlington plant will not affect IBM's current production deal with Cyrix. As a straight foundry deal, he explained, the arrangement bears no resemblance to the deal under which IBM makes, brands and markets processors that use Cyrix designs. One industry watcher speculated to Newsbytes the AMD foundry deal could be a tentative advance toward a deeper relationship between the two firms. He cited IBM's trouble-free 0.25-micron Burlington production facility as one engineering benefit that could flow to AMD if the two firms move closer in the future. He also speculated IBM might be partly motivated by a need for a "Plan B" should the recent buyout of Cyrix by competitor National Semiconductor start to cause problems. National Semi was reported yesterday as having signed a microprocessor production deal with Taiwan Semiconductor. That deal presumably includes Cyrix designs. Newsbytes notes IBM's new copper-circuit chip technology could also greatly benefit AMD, since it opens the way to much faster clock speeds with no immediate need to reengineer circuits or drop below a quarter-micron feature size. Also, IBM plans a $700 million chip development facility in New York that will use the copper processes on 12-inch silicon wafers. By contrast, current designs use aluminum circuits on 8-inch wafers (Newsbytes, November 18, 1997). Larger wafers would greatly increase yield-per-wafer figures while dropping production costs. Neither firm would speculate openly on the possibilities of deepening their relationship. Remarked Allen: "Obviously, IBM is a great company. They have state-of-the-art capacity in microelectronics and excellent process technology. Of course we'll continue exploring ways for the two companies to cooperate." He added: "We've had a great relationship with IBM for years." Reported by Newsbytes News Network: newsbytes.com . (19980227/Press & Reader Contact: Scott Allen, AMD, 408-749-3311 Best wishes James