The headquarters of Intel Corp and Advanced Micro Devices Inc are practically next-door neighbors, close enough to drop by and borrow a cup of silicon.
Or arsenic, for that matter. There's no love lost between these titans of technology. They're ferocious competitors in one of the world's most ferociously competitive markets. A year-long slump in the computer business has only stoked the flames.
A call to arms
Now there are hints of recovery in the air. Sales of cheap PCs remain unexpectedly strong, leading both companies to boost their sales and revenue forecasts. But for these two leading chipmakers, a few rays of economic sunshine merely signal fair weather for battle.
Shuttling between Intel in Santa Clara and AMD in Sunnyvale is like passing through a portal between two parallel universes. In the land of AMD, you find a company that's steadily gaining market share with its powerful Athlon processors. Indeed, Ben Anixter, AMD's vice president of external affairs, points to new data from Gartner Dataquest showing that 27 percent of desktop PCs sold in the US in the third quarter contained Athlon chips. Meanwhile, AMD is preparing a new line of chips, the Hammer series, to challenge Intel's nascent Itanium processors.
Both Hammer and Itanium are designed to process data 64Mbit at a time, compared to today's 32Mbit processors. The result is an ability to handle vastly larger databases. But the Itanium won't be able to run today's 32Mbit software without special emulation programs that slow down performance. Hammer will run 32Mbit programs directly, as well as 64Mbit software.
Intel's worst nightmare?
Anixter is convinced his firm has Intel directly in its crosshairs. "AMD's their worst nightmare," he says.
But for a man having bad dreams, Paul Otellini seems unusually well-rested. Otellini, general manager of Intel's Architecture Group, brushes aside AMD's assertions. The latest Pentium 4 chips run at higher speeds than the fastest Athlons, he notes, forcing AMD to adopt a new chip numbering scheme in an effort to claim its chips are as good as Pentiums.
Otellini flatly rejects AMD's market share claims, insisting that Intel has actually gained share over AMD this year. Gartner Dataquest says that Intel went from 82 percent of the PC processor market a year ago to 75 percent today, but Otellini doesn't buy it.
"Our overall share has begun with an 8 for a long time, and it still begins with an 8," he says.
As for Hammer, Otellini thinks AMD's plan to run 32Mbit and 64Mbit code on the same chip is a waste of time and silicon. There are no consumer or business desktop programs using 64Mbit code, so backward compatibility with 32Mbit software isn't that important. Itanium, he says, is a pure 64Mbit product aimed at the stratosphere of high-end computing, and he expects it to dominate the field.
Meanwhile, the Pentium series will continue to ramp up. Intel thinks it can squeeze out speeds of up to 10GHz using its current architecture.
Not that Intel hasn't had its share of problems. Even Otellini admits the company blundered early on in the development of the Pentium 4. The new chip required a new motherboard design for computers that would use it. Intel decided that Pentium 4 motherboards would work only with a new kind of memory chip called RDRAM, invented by a firm called Rambus.
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