AMD carves entry into device market

Advanced Micro Devices is jumping into the market for consumer electronics with a new line of chips for home networking equipment, Web tablets and eventually handhelds.

The company on Monday will announce that it has created a Personal Connectivity Solutions (PCS) group, which will focus on bringing these chips to market. The division is largely the result of AMD's acquisition of Alchemy Semiconductor in February, said Phil Pompa, vice president of marketing for the PCS group. The initial products are based on Alchemy's existing line, and a number of executives and engineers from Austin, Texas-based Alchemy hold chief positions in the group.

Alchemy specializes in energy-efficient chips built around designs from MIPS, the chip spinoff of SGI. MIPS chips compete against processors built around designs from ARM, the king of cell phone chips, and from Hitachi. These chips run at slower speeds than PC processors but consume far less energy.

While the group will initially concentrate on expanding Alchemy's Au line of processors, AMD also plans to move into the market for chips for 802.11 wireless networking systems and other components necessary for building consumer-electronics products. The group will work closely with AMD's flash-memory division, one of the company's two dominant businesses.

"All of the applications we are targeting also require flash memory," Pompa said. "What we want to do is give a whole solution to our customers."

The group's first chips, the Au 1000 and Au 1100, will be targeted at residential gateways and consumer-electronics devices, respectively. The chips will run at 333MHz, 400MHz and 500MHz. Products containing the Au 1000 will start to appear in the middle of the year, and Au 1100 products will appear toward the end.

A push into cell phones, though, won't happen for a couple of years, Pompa said.

Targeting these product lines represents both an offensive and defensive move by AMD, according to analysts. Over the past three years, the Sunnyvale, Calif.-based company has sold off or closed a number of divisions,

Gartner analyst Martin Reynolds says that with its Personal Connectivity Solutions group, AMD hopes to tap the potentially lucrative market of supplying customers with full sets of multimedia features for handheld devices. see commentary

including a communications chip group. Until the Alchemy division, AMD focused on only two products: PC processors and flash memory. A new division will allow the company to pursue other opportunities.

"There is a lot of new blood that has been brought into the company," said Kevin Krewell, an analyst at the Microprocessor Report.

By the same token, AMD needed to move into this market to protect its flash contracts. Intel, which sells processors and flash memory, is on a bundling rampage in this market, and will sell customers memory, processors, circuit boards, networking chips and even blueprints for building devices. By selling complete kits, Intel can lock in its customer base.

Rich Witek and Greg Hoeppner, two former chip engineers from Digital Equipment who left the company when Intel took charge of StrongARM in a patent suit settlement in the fall of 1997, founded Alchemy in 1999. Both Witek and Hoeppner joined AMD and will continue to work on the Au line.