AMD sketches out new high-end, low-end chips

Executives here at the company's annual analyst meeting on Friday outlined a strategy that will, ideally, allow AMD to take market share in the server, corporate desktop and notebook space as well as penetrate the consumer device market with chips based around the same so-called x86 architecture.

"We're talking x86 chips down to a buck," said AMD CEO Hector Ruiz, who added that the chip markets AMD participates in should grow relatively well.

On the high end, AMD will release chips with two processing cores in 2005, and then follow in 2006 with chips based around a new chip core code-named Pacifica.

The company is relatively tight-lipped about Pacifica, but said it will be a dual-core chip that also contains virtualization technology--which allows a computer to run multiple operating systems--and a security technology called Presidio. Pacifica will appear in desktops, notebooks and servers in 2006. AMD said it also will come out with a new ultra low-power chip for notebooks.

At the other end of the spectrum, the company plans to pursue what it calls the "x86 Everywhere" strategy. It involves creating inexpensive, energy-efficient chips for Internet appliances, digital televisions, handhelds and cell phones.

The first product under the x86 Everywhere strategy is the Personal Internet Communicator (PIC), a $185 PC-like device being sold in India. Carriers in Mexico and the Caribbean will begin selling PICs in the fourth quarter.

"The beauty of x86 Everywhere is that you can leverage developments done anywhere into multiple platforms," said Fred Weber, chief technology officer of AMD.

Intel's plans are remarkably similar. The larger rival has already announced an advanced security technology called LaGrande, virtualization and dual core chips. Recently, Intel executives also said the company is working on x86 chips for consumer devices. Which company comes out with what first, however, is anyone's guess.

Next year as a whole looks promising, Ruiz said. Microprocessor unit shipments are expected to rise about 10 percent, and AMD should be able to grow faster than the market, he said.

"IT upgrades in the next two years are inevitable," Ruiz said.

Cell phone shipments are expected to rise to 700 million units in 2005, giving the company's flash memory business a boost.

AMD experienced something of a banner year in 2004, as the company saw both rising selling prices and several consecutive profitable quarters. In several previous years, it reported multimillion-dollar losses. It also began to penetrate the server market place, persuading several corporate customers such as Microsoft, DreamWorks and VeriSign to adopt Opteron-based servers in business operations.

One of the goals for 2005 is to get its chips into the corporate desktop space. Ruiz in part attributes the exclusion to the Intel Inside campaign, which provides computer makers

"We're very strong in small business, but in the big commercial accounts, we're not in them at all frankly," he said. Computer makers "have a cocaine addiction to a lot of marketing dollars.

"I don't know of a (computer maker) that doesn't hate Intel Inside. It takes away from the brand. But it is one of those things that once you are addicted to it, you can't get away from it."

Intel consistently objects to AMD's characterization of this program.

As far as flash memory goes, AMD said it will try to build on the market share gains it achieved in the first half of the year. Bertrand Cambou, CEO of the AMD-Fujitsu flash operation Spansion, also said that researchers in its labs have come up with a prototype flash memory chip, which it calls Quadbit, that can hold four bits of information per cell.

High-end flash now can hold a maximum of two bits of information. A chip that can hold four bits would be cheaper and more powerful. The company has discussed developing a four-bit chip in the past, but this is the first time it has announced a prototype. Quadbit chips will come out in 2007, according to a slide shown by the company at the meeting.

"Quadbit is moving out of research and into development," Cambou said. Intel has stated in the past that it does not plan to make a four-bit flash chip.

AMD also will begin to promote its Ornand chips. These chips mix the characteristics of the two chief types of flash--NAND and NOR--and will potentially let AMD compete in more markets. Ornand chips will have a NAND interface, so they will look like the NAND flash chips Samsung and Toshiba make for a camera or cell phone, but will contain an NOR core.

"Last year, six out of the top phone companies were working with us," Cambou said. "Today, nine out of 10 are and the remaining one may start to work with us in the next few weeks." AMD also has begun to negotiate with flash card makers.

On a final note, Ruiz said he looks forward to competing against Paul Otellini, who will become Intel's CEO next May. Although the two have worked in the chip industry for decades, they have never met, said Ruiz. Ruiz and Barrett have known each other for some time through industry events.