AMD Hopes New CPU Will Chip Away at Intel Dominance

Includes: AMD, INTC
by: Jonathan Liss

Intel rival AMD hopes Monday to staunch growing losses with the launch of its Quad-Core AMD Opteron Processor for servers, code-named Barcelona. Various analysts stress that the release is a high-stakes event for AMD, which captured 25% of the global server semiconductor market from Intel when it released its Opteron line of chips in 2003. Intel countered with its release of core and quad duo chips in 2006, knocking AMD's market share down to 13%, as its new products combined multiple processors on a single chip, making the Opteron seem all but obsolete. Server makers IBM, Sun, Dell and Hewlett-Packard have already begun designing servers with Barcelona in mind. Unlike Intel's Xeon, which combines a pair of dual processors on one chip, Barcelona places all four processors on a single chip. Industry experts are undecided which approach will yield the performance advantage. Barcelona is more power-efficient than Intel's comparable chip, a major selling point, but only runs at 2.0 gigahertz, far slower than the Intel equivalent. CEO Hector Ruiz says AMD will release a 3.0 gigahertz version of Barcelona by year's end. AMD lost $1.2 billion during the first half of 2007, as the Barcelona release date was pushed back six months. Unlike when it released Opteron, AMD will not be able to charge a premium to Intel's rival chip, as Barcelona doesn't improve server functionality above Intel's line of quad core chips. Observers agree that at the least, AMD's new chips will give businesses more variety, and the ability to play the two chipmakers off each other in order to gain price cuts. AMD shares have lost 38% YTD, while Intel shares are up almost 26%.

Sources: Press Release, Wall Street Journal, Reuters, AP, Dow Jones Newswires
Commentary: Advanced Micro: Citigroup Awaits Restructuring MovesAMD Details Roadmap: Barcelona And BeyondIs AMD Getting On Its Feet After Intel Knockdown?
Stocks/ETFs to watch: AMD, INTC. ETFs: XSD, SMH, USD.
Earnings call transcript: AMD Q2 2007Intel Q2 2007

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

About this article:

Tagged: , Semiconductor - Broad Line
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here