Fri, Nov 16, 2007 - Page 12 News List

Delays with Advanced Micro's new chip help Intel

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Advanced Micro Devices Inc, the world's second-largest maker of computer processors, is late delivering its newest chip geared for servers, helping Intel Corp extend its lead in the market, customers in Taiwan said.

"Barcelona" chips, which Advanced Micro said it would begin shipping on Sept. 10, may be delivered next month, officials at Acer Inc (宏基電腦), Asustek Computer Inc (華碩電腦) and Elitegroup Computer Systems Co (精英電腦) said.

Advanced Micro last month said output was slower than expected.

A spokesman for the Sunnyvale, California-based company declined to comment on Wednesday.

Delays may undermine Advanced Micro's ability to stem losses as it faces increased competition from Intel on server processors, which are more profitable than those for personal computers.

Shipment growth of servers, which manage networks, will probably accelerate next year and outpace desktop computers, according to Merrill Lynch & Co estimates.

"They've shot themselves in the foot," said San Francisco-based David Wu, an analyst for Global Crown Capital, who has an "overweight" rating on Advanced Micro because of the stock's decline.

"The performance of the chip isn't that bad; they just can't ship it," he said.

Barcelona is the name of Advanced Micro's latest update to the Opteron line of chips that helped the company raise its share of the server market to a record 26 percent in the second quarter of last year, from about 4 percent in 2003.

The chip has four processors, or cores, built into one piece of silicon to help speed up computing.

Taiwanese companies, which assemble most of the world's computers, said the delay is having a ripple effect on sales.

"Customers have inventory sitting and waiting for the processors, which affects their business and our shipments," said Robin Yin, a marketing representative at Taipei-based Asustek, the world's largest maker of motherboards that connect computer parts.

He declined to name which customers are affected.

Hewlett-Packard Co plans to introduce servers equipped with Advanced Micro's new chip in "early 2008," Kwang Leng Seah, a marketing manager in Singapore for the world's largest computer maker, said via e-mail.

Alex Wu, a product manager at Taipei-based Elitegroup Computer, the world's second-largest motherboard maker, said Barcelona may be available this month or next.

"It hasn't been very smooth," said K.C. Chen, marketing manager at Taipei-based Acer, the world's third-largest computer maker.

Advanced Micro's market share tumbled to 13.9 percent for server processors in the third quarter, down from 24.6 percent a year earlier, research firm IDC said.

"While our initial ramp of quad-core Opterons has been slower than anticipated, we expect the quad-core Opteron will be widely available by the middle of this quarter," Dirk Meyer, Advanced Micro's chief operating officer, told analysts on a conference call last month.

"We expect to ship hundreds of thousands of quad-core processors this quarter," he said.

Chief executive officer Hector Ruiz last month delivered Advanced Micro's fourth consecutive quarterly loss after production delays forced the company to cut prices to compete with newer Intel chips.

Last month, Intel reported profit in the latest quarter rose 43 percent and forecast sales that beat analysts' estimates.

On Monday, Intel introduced a series of processors called Penryn. That product line and Advanced Micro's slower technology development put the smaller company about two years behind Intel, according to Martin Reynolds, an analyst at Stamford, Connecticut-based research firm Gartner Inc.

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