AMD to raise speed bar with 700-MHz Athlon

The new chip, expected to be announced Monday, will mean that AMD will continue to enjoy a speed and performance advantage over Intel's top chips, according to analysts and other sources.

Intel won't be far behind, however; it is slated to come out with 700-MHz and 733-MHz Pentium IIIs on October 25, sources said. The fastest Pentium III now tops out at 600 MHz. Overall, Athlon achieves a higher level of performance than the Pentium III at equal speeds, leading to crisper, more realistic graphics, according to testers.

But Athlon optimism will likely be tempered by availability of new PCs, or the lack thereof. Released last month, Athlon-based computers remain a relatively scarce commodity at stores because of a lack of motherboards and other internal components for these computers, sources said. Supply will likely improve, but the process will take time.

IBM would not comment on unannounced products, and AMD would not comment on the new chip or the PC supply issue, citing the "quiet period" mandated by the Securities and Exchange Commission. Compaq could not be reached for comment.

In addition to PC supply issues, AMD will have to face investors on its conference call after the market closes Wednesday. The company could report losses as high as $1.24 per share, according to some analysts. Last quarter, AMD reported a walloping $173 million in operating losses and revealed that Atiq Raza, one of its most highly regarded executives, resigned.

The 700-MHz Athlon will mark the fifth new microprocessor from AMD since the chip was announced in June and started coming out in August. So far, the chip has received praise from analysts and benchmark testers. The new computers will sell for around $2,200 with a monitor, sources said.

One area where the chip excels, for instance, is in frame rate, said Dean McCarron, principal at Mercury Research. In essence, the Athlon chip acts like a souped-up film projector, processing thousands of sequential graphic scenes at a more rapid rate than a Pentium III. The end result is "smoother, more realistic movement" on games, he said.

The main complaint with Athlon has largely been finding Athlon-based PCs. Although both IBM and Compaq have released Athlon-based computers, few retailers have any of these systems in stock, according to spot checks conducted by CNET News.com. Some stores said systems were back-ordered or might be available in the near future.

Compaq's direct-sales operation is currently selling systems, but telephone representatives said it takes 11 to 25 days to build them for delivery. Sources close to IBM have said that supply of Athlon systems are constrained.

Part of the problem derives from a shortage of internal PC components such as motherboards and chipsets, said McCarron and others. Because Athlon is a new architecture, it requires that chipset and motherboard makers devise entirely new components. Ramping up manufacturing takes time and, since virtually no inventory exists, finished systems invariably get delayed.

"It is a typical set-up delay," McCarron said. "There are a lot of pieces to the equation."

AMD, of course, is not the only company dealing with problems in the industry. Earlier this week, PC manufacturers suspended the release of their first PCs to incorporate faster, next-generation Rambus memory. The reason: Intel at the last minute delayed its 820 chipset, a necessary component in these systems that currently has no substitute. The decision has sent shock waves through the PC industry.

The recent Taiwan earthquake also will exacerbate the PC component situation, said Ashok Kumar, semiconductor analyst at Piper Jaffray.