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Intel wants to "break away" from AMD

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CIOL Bureau
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At a time when most chipmakers are curtailing expenditures on new plants and

equipment, Intel is barreling ahead with its $7 billion investments that were

projected for this fiscal year. According to one company executive, this

aggressive investment program is part of what is internally referred to as

Intel's "break-away strategy."

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Breaking away from AMD that is. If successful, Intel would create a new large

microprocessor performance gap with AMD's best chips. The gap would be in such a

dramatic fashion that AMD, which has already fallen behind by some 400 MHz in

the high-end desktop performance race, would not be able to catch up and be

relegated, once again, to competing in the market for entry-level computers.

Intel is trying to mover to vastly smaller chip geometries quickly, both on

200 and 300 mm wafer fab lines. Processors with 2 to 3 GHz performance levels

are likely to be brought to market over the next 12 months and sold at prices

that are in line with current 1.1 to 1.7 GHz chips.

In the short turn, steep price cuts are also a key part of the break-away

strategy as Intel is expected to announced steep price cuts on Pentium 4 chip in

the weeks ahead.

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Intel vice president of architecture and marketing Anand Chandrasekher said

that the long term Intel will benefit from the investments the company is making

today in producing higher yields and lower material costs. Those efficiencies

will help stabilize Intel's profits amid the price war with rival Advanced Micro

Devices.

Chandrasekher spoke at a technology conference hosted by US Bancorp Piper

Jaffray in Boston. He reiterated Intel's goal of replacing all Pentium 3 chips

in the desktop PC market with the Pentium 4 by the end of this year. "Our

goal is to make the Pentium 3 obsolete. During the past 20 years, history has

proven that computer users will continue to want semiconductors with better

performance."

Whether Intel will be able to succeed will depend on how AMD will be able to

respond to Intel's aggressive moves, which appear to have failed to stop AMD

from growing its share of the processor market. AMD will have to responds soon

with new high-performance Athlon chips to compete with Intel's 1.7 and 1.8 GHZ

processors.

Unlike much of the past two years when AMD's latest processors outperformed

Intel's best, Intel now seems to have the upper hand in being able to answer

just about anything AMD brings to the market.

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