AMD K6 design chief quits

Vinod Dham, who led development of Intel Corp.'s Pentium chip and was lauded as a possible savior for struggling Advanced Micro Devices Inc., resigned Thursday from the Sunnyvale, Calif., chip maker.

The resignation comes almost a month after chief executive Jerry Sanders demoted Dham from his post as vice president of AMD's Computation Products Group.

"It was kind of evident at the analysts' meeting last week in Santa Clara what was happening," said Ashok Kumar, an analyst at Loewenbaum & Co. "Vin was a sideshow there, not nearly as prominent as he was when they rolled out their K6 chip."

Ashok said the demotion, which took place in mid-September, meant that Dham was no longer running the firm's microprocessor division.

"Before the demotion, he was reporting directly to Atiq Raza, but things changed," Kumar said. "Obviously, the K6 processor was his baby, and so far, the execution has failed miserably. There was no way Sanders was going to take the full hit for this, so Vin was the scapegoat."

Dham and Raza, who currently serves as chief technology officer, came to AMD in a package deal when the company acquired NexGen Inc. in October 1995. The former NexGen operations had been integrated into AMD as the California Microprocessors Division.

AMD spokeswoman Dyan Chan said AMD had accepted Dham's immediate resignation, but offered few details.

"He didn't say what his immediate or long-term plans were," Chan said. "Obviously, he was a big part of the team that brought the K6 processor to market, and we appreciate his efforts."

Mario Morales, a semiconductor analyst at International Data Corp., said the K6 chip so far has failed to meet the expectations set by AMD's honchos.

"This is probably related mainly to the yield problems they've been having with the K6 chip," he said. "Dham was really pushing for the next generation and Jerry Sanders probably decided to put the brakes on it."

Known for his design prowess and project loyalty, Dham spent 16 years at Intel in that company's x86 program that included overseeing development of the Pentium microprocessor.

But all the loyalty and hype in the world couldn't solve AMD's production difficulties.

Company officials in late September announced what most analysts had expected for some time: lower-than-expected yields on the K6 microprocessor would result in an operating loss substantially larger than anticipated in the third quarter.

Sure enough, AMD reported a third-quarter loss of $31 million, or 22 cents per share, on revenues of $596 million.

Jonathon Joseph, an analyst at Nations Bank Montgomery Securities, summed up the company's troubles. "Their strategy is flawed because they're pricing their chips at 25 percent below what Intel's fifth-generation Pentiums go for," he said. "They're not doing this because they want to, but because the market is making them."

"The yield difficulties is a serious issue because it causes two big problems," Joseph said. "It costs more to manufacture because you have fewer good die candidates and the speed grades are hit, too."

Ironically, it was Raza, Dham's longtime colleague, who was most optimistic about the K6 chip.

"Many people distanced themselves from K6, as the project seemed overly ambitious," Raza said in a recent interview with India-West newspaper. "There was a disbelief and a near-universal feeling that it couldn't be done. But in a top-level meeting with AMD/NexGen management, I offered to take on complete responsibility for development of the chip. I was willing to stick my neck out and be accountable for any problems."

Attempts to contact both Dham and Raza were unsuccessful.

"Life is not fair," Kamur said. "Dham has a lot of experience and will land on his feet. But I'm not as sure about AMD."