[UntirtaNet] AMD Fires at Intel With 1.8GHz Athlon

June 10, 2002 
AMD Fires at Intel With 1.8GHz Athlon 
By Ken Popovich <mailto:ken_popovich@xxxxxxxxxxxxx> 
 <>
Advanced Micro Devices Inc. on Monday released its first desktop 
processor built using its new 0.13-micron manufacturing process, 
a method that can produce faster, less power-hungry and smaller 
chips, which ultimately are cheaper to make.  Though the clock 
speed of the new Athlon XP 2200+ is 1.8GHz --- only about 6 percent 
faster than AMD's previous 1.73GHz XP 2100+ --- the chip's launch 
is particularly noteworthy as it marks the product line's migration 
to a more efficient production method that will enable AMD to 
remain competitive against Intel Corp.'s Pentium 4.  Intel and 
AMD usually migrate their product lines to more modern manufacturing 
methods every 18 to 24 months. In general, the switch, known 
as a process shrink, allows the etching of smaller transistors 
onto silicon chips. As a result, more transistors can be packed 
onto the die to improve performance. In addition, the overall 
chip die is reduced, easing manufacturing costs per chip. Smaller 
chips also consume less energy.  Intel began migrating its PC 
processors from a 0.18-micron to 0.13-micron process last year, 
and in January introduced its first desktop Pentium 4 chip built 
using the new process. But while Intel migrated first, AMD's 
chip is less expensive to produce because its XP 2200+ is about 
40 percent smaller than a comparable Pentium 4 processor. AMD's 
chip relies on its lower manufacturing cost per chip to undercut 
the prices of Intel's products, largely viewed as its sole competitive 
advantage.  However, Intel has recently stepped up the pressure 
on AMD by slashing prices <http://www.eweek.com/article/0,3658,s=701&a=27395,0
0.asp> across its Pentium 4 line more than 50 percent between 
April and May. The cost-cutting moves effectively eliminated 
AMD's usual price advantage.  Monday's launch of the XP 2200+ 
underscored that point, with the chip initially priced at $241, 
the same price as a 2.2GHz Pentium 4, which AMD claims offers 
similar performance. (Prices are based on 1,000-unit shipments.) 
 The relatively low prices stand in stark contrast to the heady 
days of PC sales growth in late 1999 and early 2000. For example, 
AMD priced its first 1GHz chip at $1,299 when it was first introduced 
in March 2000.  Intel's spring price cuts, while in keeping with 
an historical trend, may have undermined the chipmaker's profitability 
amid a continued slump in PC sales.  Last week, Intel stunned 
Wall Street <http://www.eweek.com/article/0,3658,s=701&a=27862,00.asp> 
by lowering its sales forecast for the current quarter. Financial 
analysts expressed particular concern about Intel's projection 
that its gross profit margins would slip to 49 percent, well 
below an earlier forecast of 53 percent. The news sent the price 
of Intel share plummeting about 20 percent over two days. ~



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