AMD rolls out K6-III chip

The K6-III, which runs at 400 Mhz and will hit 450 MHz next month, is AMD's attempt to enter into the performance and business computer segments, according to Dana Krelle, vice president of marketing. AMD chips mostly come in consumer PCs selling for less than $1,000. (Click here for a CNET Computers.com review of K6-III computer.)

While the K6-III will start in the consumer market, improved performance benchmarks, especially on the Windows NT operating system, will make the chip an attractive, less expensive, option to Intel processors for these markets, he added. The 400-MHz version will sell for $284 in volume while the 450-MHz version will sell for $476, lower than Pentium IIs and IIIs at similar speed grades.

"The K6-III 450 MHz will be the fastest chip on the market. It will be faster than a Pentium III 500 MHz," he said.

Compaq Computer will become the first PC maker to use the chip, he added, but others will follow. Last week, Gateway signed a deal to introduce AMD-based PCs to the U.S. market in 1999.

Analysts, however, remain skeptical of the effect the K6-III will have on the market. The chip will likely only be able to go up to 500 MHz, giving it a relatively short life span before being replaced by the K-7, coming in the second half of the year. AMD has also recently had more difficulties in manufacturing enough high performance processors.

"They have a hard time attracting new customers because they can't hit their manufacturing goals," said John Joseph, semiconductor analyst at NationsBanc Montgomery Securities. "AMD's problem is AMD."

The boost in performance for the K6-III comes from the introduction of a 256KB secondary, integrated cache, Krelle said. Cache memory acts as a data reservoir for the processor core and in general improves performance. The upcoming Pentium III, and most Pentium II chips, contain 512KB of secondary cache that sits alongside the processor.

On the K6-III, however, the cache is integrated into the same piece of silicon as the processor, which speeds up communication with the processor. Although the integrated cache is smaller, it ends up delivering a higher level of performance, according to Krelle and others. In addition, up to 2MB of third level cache can be added to the K6-III as well.

Intel Celeron chips contain a 128KB integrated secondary cache, but the Pentium III line won't become "integrated" until the third quarter, according to most sources. As a result, AMD enjoys a delta in performance with the chip. The K6-III also comes with the 3DNow multimedia enhancements which are similar to the enhancements coming with the Pentium III, which gets officially goes on sale on February 26.

AMD, in fact, is claiming that a 400-MHz K6-III with the 2MB of third level cache will outperform a 500-MHz Pentium III.

Analysts, however, say that performance gains will not be easy. The current designs of the K6-2 and K6-III will be difficult to boost past 500 MHz, said Dean McCarron. In addition, "Intel is going to be very aggressive on pricing," with the Pentium III, said Joseph. The end result: the K6-III will only have a limited life span and will start to rapidly lose market value.

Krelle, however, disputes this. The K6-2 and K6-III will continue to be produced by AMD through 2000 and continue to come out at faster speeds. As Intel has done with the Celeron chips, AMD will use these older processors for computers in the less expensive product segments and attempt to reach more lucrative markets with the K7 and its successors.

"We are going to have different classes of products. We will have product lines to address different markets," he said, adding "We will have the lowest-cost solution for the clock rate."