AMD to Retake Speed Crown

Electronic News, Nov 29, 1999 by Arik Hesseldahl

Advanced Micro Devices Inc. (AMD) last week said it plans to retake the clock-speed crown from Intel Corp.

AMD today will unleash a 750MHz version of its Athlon processor. Sources said the chip will support the Apollo Pro PC-133 chipset from VIA Technologies Inc. in addition to AMD's own 750 chipset. Currently, Intel's fastest microprocessor is the 733MHz Pentium III Coppermine.

AMD had planned on making the announcement on Dec. 13 but apparently sped up the introduction in order to take advantage of recent shortages of Intel's Pentium III Coppermine parts, sources said. The new Athlon likely will be more widely available than Intel's parts and possibly will be lower priced, although that could not be confirmed.

Rumors have surfaced that AMD will announce a major design win for the new part with Gateway Inc., but a Gateway spokesman denied that an announcement was scheduled for Monday.

Today's announcement appears to be the latest move in a campaign by an apparently reinvigorated AMD to invade the higher volume commercial PC segment, where Intel-based systems generally hold sway. AMD's success to date mainly has been in the consumer PC market.

"What I think this shows is that AMD is doing a good job of ensuring that its partners are executing," said Mario Morales, an analyst with International Data Corp.

Morales said to expect more from AMD in the way of a solidified technology roadmap and a refocused product strategy. Watch for the company to reposition its products for consumer systems with a combination of K6 and Athlon parts. Moreover, Morales said, AMD's 750 chipset and K6-2 Plus line of processors for notebooks will give the company a weapon to attack the commercial space.

"What this announcement shows is that AMD is now beginning to solidify its strategy, and we're going to see a lot more interesting announcements over the next few months," he said.

As for Intel, Morales expects the chip giant to play a waiting game and not make any serious moves until after January.

What a difference a few months can make.

So far this year, AMD has reported losses of more than $126 million on sales of nearly $2 billion. This is not what you'd expect from the company that had the fastest chip on the planet during the summer. The company also managed to briefly knock Intel off its pedestal as the leading chip supplier to low-end consumer PCs, which sold briskly during the year, as well as score a raft of design wins, among them Gateway Inc. and Compaq Computer Corp.

But Intel's sheer size, and the fact that it has several processor lines with higher profit margins, worked in its favor. Added to that, AMD suffered badly when a problematic transition from a 0.35-micron to a 0.25-micron process technology degraded its ability to deliver chips in high volume. Time, the conventional wisdom said, was not on AMD's side.

But the end of 1999 has seen the emergence of a leaner, meaner AMD. The company in April sold off its Vantis Corp. unit to Lattice Semiconductor Corp. for $500 million, and in October, it announced plans to sell its Communications Business unit. AMD's new fab in Dresden, Germany also is coming on line and is expected to begin full volume production early in 2000, and the transition to 0.18-micron process technology is going smoothly, according to all indications.

"When AMD made the transition from 0.35 micron to 0 .25 micron, it desperately needed the new technology in order to get its clock speeds up to be more competitive," said Nathan Brookwood, principal analyst with Insight 64, Saratoga, Calif. "With the Athlon product, because of the design of its pipeline architecture, AMD has been able to raise the clock rate of the 0.25-micron parts to be more than competitive with Intel's 0.18-micron parts, without needing to go to the newer technology. Now it's moving to 0.18-micron because it makes the chips smaller and less expensive, not because they need it to go faster. That has allowed AMD the luxury of taking its time and making sure it had it right before it moved over to the new process."

What remains to be seen is how well that transition takes place with chips to be shipped in high volume out of Dresden and then later with copper interconnect technology. That could lead to AMD being the first to break the 1GHz clock-speed barrier with volume-manufactured parts, months before Intel, Brookwood said.

"AMD is really much more in control of its own fate than it has been in many a year," Brookwood said. "The only potential threat lies in the Intel Willamette processor, which isn't due until the fourth quarter of next year at best. When that pops out, then we'll see what happens with regard to the Athlon story, but meanwhile, I think AMD has a lot of wind in its sails."