AMD has been falling this week because of worries that stiff competition from Intel is forcing the company to sell at prices that leave it with too little profit margin. But Intel too saw its stock slide amid concerns over price cuts.
With less than two hours before the closing bell, AMD's stock had dropped more than 12 percent. Before trading resumed this morning, the Sunnyvale, California, company's shares had already dropped 24 percent from Monday.
Intel was down another four points after dropping 8.56 yesterday. The Santa Clara, California, chip giant has been slashing prices on its low-cost Celeron processor, which it introduced last April to contend with AMD's gains in the market for chips that power low-cost personal computers.
"In the light of Intel's recent pull-in of its February 28 price reductions to February 8, and pending product announcements, we are re-assessing our competitive response," AMD CEO Jerry Sanders said in a prepared statement yesterday. "The likely outcome is that in spite of the planned richer mix [of AMD processors], we will be unable to increase our microprocessor average selling prices in the current quarter.
Concern about AMD intensified Wednesday after it canceled appearances at two technology conferences, fueling speculation that it may be shopping its Vantis division. Despite this week's deal with Gateway for a consumer computer in Japan, AMD seems to be faced with several problems.
Intel will start shipping chips based around the more advanced 0.18-micron process in the second quarter, he said, earlier than expected. A 433-MHz Celeron chip is due in March, said sources, while a 466-MHz version will come out in May with a 500-MHz chip to follow.
AMD will have to match these performance advances. But the company has previously stumbled in trying to implement new technology. Recently, AMD struggled to produce enough 350-MHz K6-2 chips.