Chips Hit 1GHz Milestone

SAN MATEO (03/10/2000) - It was a close race, but when Advanced Micro Devices Inc. (AMD) barely beat Intel Corp. to the finish line last week in the quest for a real-world 1-GHz processor, it marked a crowning achievement in what has been a very good month for AMD as the Intel giant-killer.

The announcement of the 1-GHz AMD Athlon processor and its rapid deployment by vendors such as Gateway and Compaq effectively put to rest any doubts among industry experts that AMD could compete head-to-head with Intel and win. AMD unveiled its 1-GHz Athlon March 6, while Intel rolled out the 1-GHz Pentium III CPU March 8.

Additionally, less publicized deals, such as a new agreement between AMD and Cisco Systems Inc. to be the exclusive provider of flash memory for the networking magnate for three years, have chipped away at Intel's dominance.

"With the Cisco deal, AMD now has a 30 percent worldwide share of the flash memory market, over Intel's 25 percent," said Kevin Plouse, vice president of technical marketing at AMD's memory group.

Analysts offered differing perspectives on the outlook for Intel and AMD chip wars.

"What's happened with AMD's success is we've seen Intel shift from a near monopoly [in the PC chip marketplace] to basically less of a monopoly," said Dean McCarron, an analyst at Mercury Research, in Scottsdale, Ariz.

"Intel will remain the leader, as AMD doesn't have anything near the manufacturing capabilities that Intel does," McCarron said. "And as an end result, I think the competition actually helps Intel, although in getting to this point, Intel has made the mistake of pushing out some products too soon just to keep ahead [of] AMD," said McCarron, referring to Intel's difficulties with its 820 chip set and other system-logic issues.

"I think now that both AMD and Intel have surpassed the 1-GHz mark, they'll both take a step back and see if they can produce these processors more profitably," said Murray Slovick, an analyst at the ChipCenter, based in New York.

Mercury Research's McCarron agrees that the time is ripe for a redirection of industry priorities. "I think we will see a sort of a breather happen, probably around the 1.5-GHz rate," he said. "Because from here on out, the physics of developing even faster processors becomes enormously more complex. I think what we'll see is a shift away from this need for pure speed toward more development of the systems and software that surrounds the processors."

Advanced Micro Devices Inc., in Sunnyvale, Calif., is at www.amd.com. Intel Corp., in Santa Clara, Calif., is at www.intel.com.

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