AMD and Gateway: Back in the chips?

What looked like divorce may be headed for reconciliation -- a rumored Gateway PC with AMD chips could be about to ship.

Everyone thought the divorce was final, but Gateway may be working with Advanced Micro Devices again.

North Sioux City, S.D.-based Gateway is getting ready to introduce a desktop PC based on AMD's (NYSE: AMD) Athlon processor, according to certain company officials.

For customers, it could mean additional availability of PCs with the Athlon chip. Gateway (NYSE: GTW) may also help bring down prices of such systems.

It would also be a win for AMD because its relationship with Gateway looked to be over. Gateway announced several months ago that it was switching from the AMD K6-2 chip to Intel Corp.'s Celeron processor to power the Gateway Profile 2, a recently announced version of the company's all-in-one design PC.

Currently, only one Gateway PC offers an AMD processor, and the Athlon chip is not used at all by Gateway.

Rumors of a forthcoming Athlon-based PC line have been circulating the Web for nearly a week. The rumors began when what was depicted as an internal Gateway e-mail describing plans to offer an Athlon-based desktop in Gateway's now defunct Select line of Desktops was posted to Web bulletin boards. The document says that Gateway would resurrect Select with Athlon chips, starting at about $1,299.

A Gateway spokesman, however, would not confirm the authenticity of the document or any company plans to offer the Athlon PC.

AMD "continues to compete for our business. They are an important supplier to us," the spokesman said. However, he added: "We never discuss any product plans."

Sales force spilling the beans
Calls to Gateway's desktop marketing department, where the memo was said to have originated, were not returned.

But while marketing didn't return calls, Gateway salespeople have been happily telling interested parties that an Athlon-based system is in the works.

One salesman said that Gateway sales people had been briefed on the new system, which he described as a "rocket" when compared with a similar system based on an Intel Pentium III chip.

"It might be (introduced soon)," he said. "We're just standing by for further notice."

If the system does ship, it will be a boon for AMD. The Sunnyvale, Calif., chip maker has only two major Athlon supporters: Compaq and IBM. Both offer consumer-oriented PCs with a range of Athlon chips up to 700MHz. Those systems cost between $2,300 to $2,400.

AMD has announced plans to introduce a 750MHz Athlon chip by the end of the quarter.


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