Processor 'dead zone' looms for Intel

Intel is leaving itself vulnerable to a serious attack from AMD microprocessors over the next 12 months, according to an industry analyst.

The dominant microchip manufacturer, whose chips run the majority of PCs, is not planning a high-end chip for PC systems costing under $2,000 (about £1,335) until mid-2001, leaving this crucial segment of the market open to products from smaller rival Advanced Micro Devices (AMD), according to a new report by analyst Bert McComas of InQuest Market Research.

At the moment Intel's Pentium III line of microchips handles the high-end, mainstream desktop market. Intel recently released a 1.13GHz Pentium III. But for the next few months, new Intel chips will mainly be aimed at systems costing more than $2,000. For example, the Pentium 4, set for release later this year, will ship with the chipset codenamed Tehama and supporting expensive Rambus memory (RDRAM).

Pentium 4 will not make it into the sub-$2,000 range of PCs until late 2001, according to McComas. In the third quarter of next year Intel will release the "NorthWood" Pentium 4 with the "Brookdale" chipset, which will support either standard synchronous DRAM (SDRAM) or double data rate SDRAM (DDR SDRAM), McComas said. Both SDRAM and DDR SDRAM are cheaper alternatives to RDRAM.

In the meantime, Intel is planning a mid-2001 revision of its ageing Pentium III line that will shift it to the 0.13-micron manufacturing process. The chip is presently manufactured to 0.18-micron geometry. By reducing this geometry the chip will be faster and more power-efficient, and will be cheaper to manufacture.

That means the high-end desktop users -- typical power users such as gamers and business people -- will be stuck with revisions of the Pentium III for a period of several months. Intel has admitted serious shortages of the current generation of high-end Pentium IIIs, codenamed Coppermine, since the chip's launch last year.

This gap will leave Intel open to attack from competitor AMD, according to McComas. "Already, the industry seems to agree that Intel has fallen behind AMD in terms of its ability to ship high-speed P3 processors. From Q3 '00 until Q3 '01, this situation is expected to worsen," he wrote in the report, published on the company's Web site. "This is where AMD will really be able to threaten Intel."

AMD, whose strength has always been in the lower-cost market, is planning a series of fast desktop processors aimed at the sub-$2,000 market, including ever-faster versions of its Athlons codenamed Thunderbird and Mustang.

The company launched the new Thunderbird Athlons in June, closely followed by a low-cost processor called Duron. Thunderbird, the upcoming Mustang, and its companion mobile chip Corvette, are all based on the Athlon processor core introduced exactly a year ago.

The "dead zone", as McComas calls it, could seriously erode Intel's hold on the consumer PC marketplace and challenge its system of patronage in the PC manufacturer community. "This... will be the acid test for OEMs such as Dell, which has maintained an Intel-only product mix," McComas wrote. "If Dell persists in its stance during this period, it could stand to lose market share in this most lucrative segment -- one where Dell is currently seen as a leader."

McComas notes that AMD's dual-processor Athlon will also have an opportunity to challenge Intel in the high-end PC and workstation space.

According to Intel's roadmap, NorthWood will move to the 0.13-micron process in Q3 2001. This could allow the chip to hit 2GHz, McComas said.

See Chips Central for daily hardware news, including an interactive timeline of AMD and Intel's upcoming product launches.

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