AMD claims industry's fastest PC chip

December 27, 2000 —

Advanced Micro Devices Inc. saved a surprise for the launch of its Athlon processor today -- a 650-MHz version that AMD claims is the fastest x86-type processor on the market.

Athlon, formerly known as the K7, is being hawked by AMD as a "seventh-generation" processor, thanks to a handful of architectural improvements aimed at boosting performance. Athlon initially will be sold in high-performance desktops, but over time the chip maker hopes the new processor will bring in revenues from the more profitable workstation and server markets.

IBM and Compaq Computer Corp. will be the first big-name vendors to release Athlon desktops later this month or early next month, an AMD spokesman said Friday. Prices are expected to start at about $1,300 for a 500-MHz Athlon PC, increasing to more than $2,000 for PCs using the fastest chip, AMD said.

A few analysts interviewed last week said Athlon is faster than an Intel Corp. Pentium III processor running at the same clock speed. At 600 MHz, the AMD chip was up to 14% faster than the Pentium III in a handful of benchmark tests conducted by Mercury Research Inc. Mercury will post the results of those tests on its Web site today, said Mike Feibus, principal analyst at the Scottsdale, Arizona-based firm.

While analysts concede that AMD has designed a humdinger of a processor, they caution that its success depends on the company's ability to bring Athlon to market without any significant manufacturing hiccups -- something the chip vendor has struggled with in the past.

"With AMD, the question is never can they design a chip. The question is can they manufacture it in huge volumes, and can they do it on time," said Tony Massimini, chief of technology at Semico Research Inc. in Phoenix.

Besides the challenge of bringing a brand-new chip architecture up to volume production, AMD is also preparing to switch later this year to a more advanced, 0.18-micron manufacturing process. The company is also in the midst of starting up a $2 billion manufacturing plant in Dresden, Germany. Still, AMD executives have confidently predicted that they can make "hundreds of thousands" of Athlons this quarter and expect to manufacture 1 million of them in the fourth quarter of this year.

Because the chips are aimed at high-performance systems, AMD will likely sell fewer Athlon chips at first, making manufacturing concerns less of an issue, said Nathan Brookwood, principal analyst at Insight64 in Saratoga, Calif.

AMD also faces a marketing challenge, analysts say. The company will need to convince customers that it's up to scratch as a provider of reliable, high-quality components if the chip vendor wants to break out of the low-cost, mostly consumer, niche it currently occupies. Some buyers still equate AMD's K6 family with "cheap chips," which partly explains the introduction of a new brand name, Brookwood said.

Analysts agreed that Athlon is a critical chip for AMD, which has been battered financially by falling PC prices and shrinking margins in the consumer desktop market.

"They're certainly saying all the right words, but after their history, everyone's waiting to see them execute," said Feibus.

Athlon was also launched today in 600-MHz, 550-MHz and 500-MHz versions, as AMD had previously indicated. Intel's fastest Pentium III, released last week, runs at 600 MHz. Intel has no current plans to increase that clock speed before November, although the company will make improvements in other areas of thhe platform that should make its chips perform better, an Intel spokesman said Friday.

A fast clock speed is only one measure of a processor's performance, and AMD is highlighting several improvements in Athlon's seventh-generation architecture. For starters, the chip has a 200-MHz system bus licensed from Digital Equipment Corp., which is now owned by Compaq Computer Corp. A faster bus speed allows a processor to access data from memory more quickly. By contrast, the Pentium III has a 100-MHz bus, which Intel has said it will push to 133 MHz later this year.

In 1,000-unit quantities, Athlon is priced at $849 for the 650-MHz chip, $615 for the 600-MHz part, $449 for the 550-MHz chip, and $249 for the 500-MHz part, an AMD spokesman said. These are the prices given Friday, which were revised from prices given earlier last week to press and analysts.

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