AMD joins nano-chip wars

AMD signs a deal with a Taiwanese chipmaker to produce chips based on 90-nanometer circuitry--which will help it battle Intel for market share.
Written by ZDNET Editors, Contributor
PENANG, Malaysia--U.S. chipmaker Advanced Micro Devices (AMD) said on Monday its alliance with a Taiwanese firm to make the world's smallest microchips will help it stay in the battle for market share with Intel.

Ajay Marathe, vice president of AMD's manufacturing services division, told Reuters the company would partner Taiwan's United Microelectronics to produce chips based on 90-nanometer circuitry at a plant in Singapore.

He declined to give a start date for the project.

Micro-processors, the brains inside a personal computer, contain billions of circuits--each one thousand times thinner than a human hair. A nanometer is one-billionth of a meter.

``Obviously at the heart of innovation is technology,'' Marathe said. ``To keep the customers that we have happy and to entice more people into our products, we have to move with technology.''

Two weeks ago, Intel detailed plans to make 90-nanometer scale chips, versus 130 nanometers currently, which will be faster, cheaper and more energy-efficient.

Intel, the world's largest chipmaker, plans to introduce 90-nanometer technology at its dozen or so plants around the globe by the second half of 2003.

The move promises to help ensure its pole position in the sector at a time when the industry is suffering its worst downturn and most large chipmakers have to cut back on spending.

Marathe said AMD could still give the giant a fight.

``Intel is cash-rich but that's not the point,'' he said. ``We believe forming alliances and being customer-centric is the way to go and we have been able to chip away at their market share.

``Back in 1999 we only had about six to seven percent, and people had written us off.''

AMD's share of the PC processor market stands at nearly 16 percent, having dropped 2.6 percentage points in the second quarter, compared with Intel's 82.8, according to data from Mercury Research.

Business PC boost
Marathe also said a deal struck with Hewlett-Packard Company last week would boost AMD's stake in the higher-margin business PC and server markets, where most of the buyers are deep-pocketed large corporations.

``I can't tell by what percentage point it can raise our sales but it will be a boost,'' he said. ``Having HP's endorsement will help us move into a real stable market.''

Based in Sunnyvale, California, AMD achieved its long-standing goal of getting a top U.S. manufacturer to use its chips when HP agreed on selling a Compaq-branded PC powered by AMD Athlon XP processor. HP is the world's number one PC maker after its acquisition of Compaq earlier this year.

Known as the D315, the PC model is aimed at the small- and medium-business market as well as the government and education markets, and will come with either the Athlon XP 2000+ or Athlon XP 2200+ chips.

AMD introduced its Athlon processor in 1999 but this is the first time the chip will be used in PCs made for the business market by a top U.S. firm. In the past both the pre-merger Compaq and HP used AMD processors in PCs for consumers.

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