Intel shares rose 22 cents to $27.60 yesterday in Nasdaq Stock Market composite trading; they have fallen 14 percent this year.
Intel focused on a kind of flash memory that stores software in cell phones, as well as raising prices. That cost Intel orders from phone makers such as Nokia and left it out of the market for set-top boxes, digital video recorders, printers and other home electronics.
In his office about a mile away from Intel's headquarters, Amir Mashkoori, general manager of Advanced Micro's flash-memory venture, said his product technology and customer relationships will fend off Intel's renewed charge.
"It's a lot nicer to be in a position to talk about actual performance instead of what we are going to do," Mashkoori, 42, said in an interview. "They come out and say `Here's a solution and the whole world has to adopt it because we're Intel.'"
Lacey said Intel is also working on products to compete in the fastest-growing market sector: storage of photos in digital cameras and of music files in MP3 players.
Samsung and Toshiba each took 20 percent of the market by producing a type of chip called NAND, which is cheaper to make than the NOR chips produced by Intel and Advanced Micro. NOR allows phones to read data more quickly than NAND, but is slower at writing large music and picture files.
NAND sales will jump 77 percent to $7.4 billion this year, iSuppli's Van Hees said. That's com-pared with overall market growth of 42 percent and a forecast increase of 25 percent in NOR sales.
"They need to be able to tap into the data storage market," she said in an interview. "That market has had explosive growth in the past and will continue to have robust growth."
Lacey said he can reduce the cost of his chips to compete with Samsung and Toshiba products.
"We are working like crazy because we have some catching up to do," Lacey said.
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