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AMD counters Intel with 800-MHz Athlon chip

AMD's new processor matches the clock speed of Intel's fastest Pentium III and underscores a bitter rivalry between the two chipmakers.

AMD shot back at rival Intel today in the ongoing battle for chip supremacy by releasing its fastest Athlon processor to date and by demonstrating a consumer PC that runs at 1 GHz.

AMD's new 800-MHz Athlon, announced at the Consumer Electronics Show in Las Vegas, matches the clock speed of Intel's fastest Pentium III chip and actually outperforms the Pentium III in certain benchmark tests, according to analysts. Both IBM and Compaq Computer announced PCs to go along with the chip, while Hewlett-Packard opted for the AMD K6-2 for notebooks for the first time.

Meanwhile, AMD, in conjunction with KryoTech and Compaq, showed off a Presario computer with a 1-GHz (1,000 megahertz) Athlon running inside. But consumers won't see this system in stores; KyroTech's minus 40 degrees Celsius cooling system, which is attached to the demo Presario, typically only comes with workstations. Still, the demonstration affords the company some bragging rights.

The new Athlon, and AMD's ability to keep up with Intel, are part of a growing sense of optimism for the often-derided company. In the past, AMD processors were slower, or in short supply, in comparison to its bigger rival. Now AMD chips keep up in performance and Intel is the company experiencing a supply pinch, although AMD has seen sporadic supply troubles on its fastest chips as well.

Just yesterday, Gateway indicated it once again would start to incorporate AMD chips into its PCs. Gateway said a shortage of certain Intel Celeron and Pentium III chips caused it to lose between $200 million and $250 million in sales in the fourth quarter.

"For the first time in this rivalry, AMD has the ability to keep pace with Intel in this speed race," said Technology Business Research analyst Kelly Spang. "That basically puts a new twist on Intel and how it plans its own strategy in terms of its own product rollout."

Longtime AMD critic Ashok Kumar of U.S. Bancorp Piper Jaffray upgraded the stock to "buy" today, although he and other analysts have said that Intel will be fighting back with faster processors, and more of them.

Compaq will make two 800-MHz Athlon systems, one priced at $3,027 and the other $2,550. The top-of-the-line model comes with 256 MB of RAM, 20GB hard drive, 10X DVD-ROM drive, 16-MB 3dfx Voodoo3 3500 graphics card and 19-inch monitor. A CD-RW is $1 more under a special promotion.

IBM announced the S Series 880 PC today, featuring the 800-MHz Athlon processor, 128-MB of RAM, 27GB hard drive and 32MB graphics card with digital flat-panel port. Big Blue will begin taking orders Jan. 17.

Responding to increasing pressures from AMD, Intel late last month released the 800-MHz Pentium III Coppermine processor ahead of schedule and moved up the release of 850-MHz and 866-MHz processors for later this quarter.

Though Intel says it accelerated its processor road map because of better manufacturing yields, the timing, at the end of the busy holiday shopping season, suggests AMD forced Intel to move faster, analysts said.

"Intel now must play for a worse-case scenario in terms of?speed grades," Spang said. "That is one of the traps Intel has fallen into recently. It was always the assumption Intel would be faster than AMD, and that assumption is being discarded in some cases."

Meanwhile, the Intel chip shortages are sending shivers through the industry. The shortages hit Gateway hard as many of its systems are equipped with the 450-MHz Pentium III, said Merrill Lynch analyst Steve Fortuna.

A Dell Computer salesperson today quoted more than a month build time for an 800-MHz Pentium III consumer system. Compaq lists 800-MHz Presario consumer models on its Web site, but a salesperson today said the company is not taking orders because processors are not yet available.

Compaq, which once only offered AMD chips on its lower-performance, low-cost systems, has been a big backer of Athlon. The PC maker has increasingly adopted Intel Celeron processors on its cheapest systems--those under $600--moving AMD processors into the lower midrange and lower high end of its consumer line.