San Diego, CALIF. — Kirk Ladendorf reports that when Advanced Micro Devices Inc. introduced the first versions of its new Athlon processor in 1999, industry analysts quickly dubbed it a “bet-the-company chip.” The new high-performance chip was designed to finally put AMD products on a par with the best that industry rival Intel Corp. could produce. “This is it,” said AMD Chief Executive W.J. “Jerry” Sanders. “There is no tie. It’s win or lose.”
So far, the new chip has been a winner, and it’s turned around the fortunes of the embattled chip maker, which posted four straight money-losing years in the late 1990s.
Quarter by quarter, AMD has improved the performance of the Athlon chip and improved its sales. Along the way, the company’s financial results have changed from deep losses to record profits.
AMD’s 1.1 gigahertz Athlon is the fastest chip in personal computing, and Sanders says faster versions are on the way. When rival Intel Corp. introduced a fast Pentium III chip to match the Athlon’s speed, it was forced to recall the limited number of chips it sold because they failed when operating some software programs. It was the latest in a string of embarrassments for Intel.
Intel remains by far the largest and most profitable chip company, but analysts say that its image of technological superiority over its rivals has been dented.
AMD has performed so consistently with Athlon that the company gradually is winning over once skeptical computer makers. Gateway Corp., which once avoided AMD, has become the chip maker’s largest customer. Among major personal computer makers, only Dell Computer Corp. does not use AMD’s chips.
Sanders promises that his company will keep improving the chip’s speed and performance. A 1.2 gigahertz version of Athlon is expected to be available within a few weeks and Sanders says an even speedier chip, running at 1.5 gigahertz, is due out in January.
AMD probably will need all the speed it can muster. Intel is expected to begin selling limited quantities of its next-generation Pentium 4 chip, which is expected to run at 1.4 gigahertz, so the speed and performance race between the two chip companies will resume in earnest.
The Pentium 4 is expected to available in only limited numbers until the spring of 2001.
AMD has made a strong rebound in the past year, but it still has plenty to prove, analysts say. Most AMD chips are designed for computers that are aimed at consumers rather than corporations, who buy most computers. So AMD must prove itself as a reliable supplier of chips for computers aimed at the corporate market. AMD is hard at work on that problem.
Mercury Research, a Scottsdale, Ariz., market analysis company, estimates that AMD processors captured 16 percent of the personal computer market in the second quarter, up substantially from 12 percent the year before. Interestingly, Intel slightly increased its share to 83.2 percent. Between them, the two chip makers squeezed out smaller rivals such as Cyrix Corp., which was acquired by last year by Via Technologies Inc. of Taiwan.
“There is no question that AMD is stronger now than they have ever been,” said Mercury Research analyst Mike Feibus. “They have never had an answer to Intel from the top to the bottom of the product line before.”
All because of Athlon.