It's been three weeks since an analyst published a report claiming AMD chips are about to appear inside Dell boxes, so it was about time for another one to appear. Doug Freedman of American Technology Research took things a step further Tuesday, attaching a rough March target date to a predicted Dell-AMD deal.
In a research note about Intel's stock, Freedman wrote about the negative effects on the stock that could result from a Dell-AMD deal. "We believe there will be an AMD/Dell deal announced very soon; more specifically, we believe it will come as early as March and involve Dell notebooks. The deal will likely mature from there to include servers and desktops, in that order, in subsequent months," the report said.
Now that Apple is using Intel chips, and Palm devices are running Windows, the Dell-AMD rumors are receiving top billing among technology speculators. Dell has encouraged the rumors on several occasions by praising AMD's technology but always stopped short of actually embracing the smaller chip company. Veteran chip industry analyst Nathan Brookwood likes to compare the ongoing flirtation to Charles Schultz's famous Peanuts comic strip, where Lucy constantly encourages Charlie Brown to kick the football she's holding, but always yanks it away at the last second.
But signs have been growing that Lucy might finally be setting up for a field goal. Shortages of AMD chips have been reported in Taiwan, possibly because of Dell's need to secure a sufficient quantity of the chips. Other analysts have gone on record predicting the deal. Intel has overhauled its chip design strategies, but AMD still holds a technology lead over its larger competitor based on its decision to integrate the memory controller and use point-to-point buses on its chips, according to analysts. And AMD's antitrust lawsuit might have put pressure on Intel and Dell's alleged sweetheart pricing deals, which both companies have denied.
Still, if Dell were to finally adopt AMD chips most analysts had thought the Opteron server processor would be first on the list. AMD's advantage over Intel is more pronounced in multiprocessor servers with dual-core chips, whereas few PC users need all the performance that either company delivers.
However, notebooks are bought from system builders in Taiwan, while servers are assembled and tested internally with product development teams, Freedman said in an interview. Dell is always concerned about its margins, he said, and Dell executives have cited the prohibitive costs of maintaining separate product development teams for Intel and AMD systems as a hindrance to a possible deal with AMD.
If the deal goes down, Intel's investors should prepare for slower growth and a decline in gross margins, Freedman wrote.