AMD to launch new laptop chip

By Scott Hillis

SUNNYVALE, Calif.- Advanced Micro Devices Inc. said it will offer

a new chip for laptop computers and said it expects to be able to supply

one-third of the market for computer microprocessors by 2008, stepping up its

challenge to rival Intel Corp.'s dominance.

The announcement comes as investors and analysts are keen to see how No. 2

chipmaker AMD, which has grabbed market share from Intel over the past year,

will respond to a new line-up of chips being rolled out by its far larger rival.

The laptop chip showcased by AMD is based on a new design that will help improve laptop battery life.

The company expects to make the chip available in the middle of 2007.

AMD's chips have found their biggest success in server and desktop computers,

and many analysts say its mobile offerings lag those of Intel.

Marty Seyer, vice president of AMD's commercial business, said the company

has a target this year for 30 per cent of the market for server chips, where AMD

has made its biggest strides on Intel. That's more than a one-third jump over

the 22 per cent server chip share it held in the first quarter.

But the glimpse of AMD's upcoming laptop chips left several analysts saying

they were hungry for more details before they can evaluate how the products

stack up against designs that its arch-rival may be preparing to offer.

"People were hoping that there would be a little more detail about those

chips and when they will come out," said Cody Acree, an analyst with broker

Stifel Nicholaus in Dallas, who attended the company briefing in Silicon Valley.

AMD officials declined to comment on when exactly they expected to begin

shipping chips to the world's largest computer maker, Dell Inc., which recently

agreed to begin using AMD chips instead of relying only on longtime supplier

Intel.

But Seyer hinted that its initial contract to supply high-end server chips to

Dell could lead to further ties. "I have yet to see a partnership we have

in which that one entry point doesn't expand into multiple products," Seyer

said.

According to Mercury Research, AMD had 21.1 per cent of PC processor shipments

in the first quarter, a sharp gain from the 16.9 per cent share it had a year

earlier.

AMD said it expects to increase that share to one third of the

microprocessor market by 2008. Microprocessors act as the digital brains of

computers and network equipment.

"We are fully positioned to service one third of the market by

2008," Daryl Ostrander, AMD's vice president of manufacturing, said at the

meeting. "We will manage, as we always do, these capacity additions. We

aren't going to build too much, we aren't going to build too little."

Earlier this week, AMD said it would spend an additional $2.5 billion over

three years to upgrade and expand its two factories in Germany.

AMD officials said the company was on track to have production running in

volume in the fourth quarter on 65 nanometer chips, the current cutting edge of

the industry, at its latest fabrication plant in Dresden.

It expects the next generation of chip manufacturing technology -- capable of

creating features as small 45 nanometers across -- will be ready 18 months

later, or around the middle of 2008.