AMD wrests away speed crown from Intel

AMD announced a 650-MHz version of the Athlon processor, formerly the K7, today. "With today's announcement, AMD has made history," W.J. Sanders III, chairman and chief executive officer of AMD, said in a statement.

The chip should allow AMD to brag that its processors are faster than rival Intel, which recently released a 600-MHz Pentium III. No significant upgrades to the Pentium III line are due until November, according to an Intel spokesman.

Compaq and IBM are announcing high-end consumer PCs with the Athlon chip. Also, chipset makers including Via, Acer Laboratories, and SiS are expected to announce support for the chip. A variety of PC circuit board makers, including AsusTek, are also expected to release products.

In addition, AMD will release three other Athlon chips running at slower speeds. The company intends to push the chips into the lucrative high-end business market. Shipments of the Athlon processor to PC makers began last quarter, AMD said.

The 650-MHz version is priced at $849 while the 600-MHz chip is set at $615. These lofty prices put AMD, for the first time, in the same price bracket as high-end Intel chips and may provide a revenue stream that has eluded AMD to date.

The 550-MHz chip is $449, and the 500-MHz is $249.

Some analysts have stated that the Athlon will outperform Intel's Pentium III on various applications when running at the same clock speed, which is measured in terms of megahertz. Benchmarks being released this week by AMD show that the chip outperforms Pentium III and even the higher-end Xeon by sizeable margins in a variety of applications.

The megahertz rating is important for marketing efforts. AMD and Intel executives have stated on numerous occasions that consumers often make purchasing decisions on the clock speed of chips. Until Athlon, AMD has equaled, but not surpassed, Intel in chip clock speed. Compaq makes a 667-MHz Alpha chip, but Compaq uses it in servers and workstations, not PCs.

The company previously said it would release a 650-MHz Athlon in the third quarter but said today that it would occur after the initial debut of the chips in August. A 700-MHz version is due in the fourth quarter, while Intel is planning 667-MHz and faster versions of the Pentium III.

Athlon-based PCs will start at $1,299 and go up to more than $2,000, substantially higher than the price tag for PCs containing K6-2 and K6-III processors, said Stephen Lapinski, director of marketing at AMD.

While most Athlon systems in the initial rush will go to the consumer market, commercial systems will crop up soon. Besides offering more performance in terms of the chip, the Athlon also comes coupled with chipsets that provide a 200-MHz system bus originally developed for the Alpha chip. The system bus, the main data conduit between the processor and main memory, is a crucial bottleneck for performance. Intel's current system bus runs at 100-MHz and will go to 133-MHz next month.

"There is a lot of interest in the bus," he said.

Dangers lurk
Of course, success in the megahertz race will depend upon Intel not rushing a faster version of the Pentium III to market.

Smooth execution by AMD is another big if. AMD has stumbled in the past with manufacturing and logistical nightmares that stalled product releases or prevented the company from producing an adequate volume.

Dealers said chip distributors told them as recently as August 5 not to expect Athlon chips, especially in volume quantities, just yet. The Athlon is not universally compatible with all expansion cards and other PC parts on the market, said other sources.

Further, the company is in the midst of several complex manufacturing initiatives, any of which could hamper production volumes. The company is in the process of shifting from the 0.25-micron manufacturing process to the more advanced 0.18-micron process. By the fourth quarter, the company will begin to make chips out of copper rather than aluminum and it hopes to start generating revenue from these chips by the first quarter of 2000. Also, a new chip factory is opening in Dresden, Germany, and dual processing is expected to reach the platform by the second quarter 2000.

AMD will also attempt to move into the untapped commercial market. The fear of manufacturing snafus, however, could scare away large customers.

For its part, AMD exudes confidence--"tens of thousands" of Athlons at all four speed grades have been shipped to manufacturers and distributors, executives have said. The company expects to make hundreds of thousands this quarter and will have the ability to make 1 million by the fourth quarter.

Although manufacturing problems have saddled the company before, they may not play as big a factor in the life of Athlon, said Nathan Brookwood, an analyst at Insight 64.

Because the chip is aimed at the performance segment, rather than the value segment, the company needs to produce fewer chips. Additionally, chip's design means AMD will not have to shift to 0.18-micron manufacturing or even copper to stay in a speed race with Intel.

Overall, manufacturing "is probably a more doable task than it was with the K6," Brookwood said. Besides, Intel has run into manufacturing issues of its own.

Branding strategy
The new chips will also be coming with a branding/segmentation strategy that will kick off next year. Similar to what Intel has done with its Xeon, Pentium III, and Celeron lines, AMD will take the basic core processor and tweak the surrounding technology slightly for different markets. Bus speeds, which determine how fast the chip speaks to the main memory, will differ between product segments, for instance. Chip packaging, motherboard design, and chipsets also will differ.

The Athlon Ultra, for instance, will be directed at the server and workstation markets, according to sources and published reports. Ultras will likely have faster buses but also be capable of being put into multiprocessor processor systems. The secondary cache memory, a performance-enhancing memory reservoir near the processor, will also be larger on these chips. Caches as high as 8MB will be possible, AMD executives have said. Current Xeon chips top out with 2MB of cache.

The Athlon Professional, meanwhile, will be geared toward performance consumers and commercial desktops. It will be the same as the chips coming out next week but will contain less cache memory and come in single-processor systems.

Next down the food chain will be the Athlon Select, which comes in a different package than the Professional and may not contain as many features.