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AMD evicts Intel, Cyrix at Compaq

Advanced Micro Devices effectively became the main supplier of chips for new sub-$1,200 systems to the largest PC maker in the world.

Today may go down in Advanced Micro Devices' (AMD) history as one of its most glorious days, as the chipmaker readies itself for what may be a banner year.

Today AMD effectively became the main supplier of chips for one of the hottest PC markets to the largest PC maker in the world. In other words, all the new consumer desktop systems below $1,200--one of the highest volume consumer PC markets--announced today by Compaq are using AMD processors, not Intel nor even low-cost leader Cyrix appear in this price range. (See related story)

The Sunnyvale, Calif.-based chip maker had been struggling, seemingly in vain, for years to win over top-tier vendors like Compaq to its K series chips.

"This is a wake-up call for Intel. Apparently, [Compaq] totally dropped Intel from the high-volume segment," said Michael Slater, editorial director and founder of the Microprocessor Report.

Slater added that Cyrix has apparently been bumped off the desktop into notebooks, based on the product details of today's Compaq announcement.

"This has eliminated any lingering concern about [AMD] being off-brand," said Slater, referring to the prevailing market impression that AMD hasn't been taken seriously as a viable chip supplier by top-tier PC manufacturers.

Compaq announced a bevy of new systems today, including low-cost models ranging from $799 to $1,299, dominated by AMD K6 processors running at 200 and 233 MHz. Intel Pentium II chips appeared in higher-end systems. Though this is an attractive market for Intel, since higher-end systems use higher-priced processors, it is also a bit ominous that Intel chips are not being used by Compaq for any new home systems in the burgeoning low-cost segment.

AMD chips, based on a new 0.25-micron manufacturing process, also appeared for the first time in Compaq notebooks.

Slater expects AMD to ship about 15 million processors in 1998, dwarfing the few million it shipped in 1997. "This is a huge increase in volume," he said.

Brightening the picture even more for AMD was today's separate announcement from IBM. New Aptiva consumer systems from Big Blue will use AMD's 266-MHz K6, the fastest AMD chip to date. This chip is also made on the new AMD manufacturing process. (See related story)