Advanced Micro to sell dual-capability chip for computers

Advanced Micro Devices Inc, Intel Corp's biggest competitor in microprocessors, started selling a chip for personal and notebook computers that can digest data in both 32-bit and 64-bit chunks to speed performance and graphics.

The dual capability of the Athlon 64 chip lets it produce graphics that are richer and more fluid than those rendered by 32-bit chips, while still running older programs. Hewlett-Packard Co will make a PC this year powered by Athlon 64, Advanced Micro chief executive Hector Ruiz said in an interview.

Advanced Micro is counting on new products to rebound from eight straight quarters of net losses. The Sunnyvale, California-based company in April introduced a dual-mode chip called Opteron for servers, powerful computers that run corporate networks and Web sites. It's trying to gain ground on Intel by being first with a 64-bit PC product.

"AMD will likely benefit from incremental Athlon 64 sales in the near term, but we don't see it as a threat to Intel, and we don't see it as a driver for the PC market as a whole," wrote Pip Coburn, an analyst and the executive director of UBS Warburg LLC, in a note to clients.

That's because "in the current realm of 32-bit computing, hardware performance has outpaced the advances that have taken place in software," Coburn wrote. "There isn't much software out there that the typical sub-US$800 PC can't handle."

Advanced Micro, which like its larger rival has been hurt by a three-year slump in computer spending, also has lost sales as Intel built faster chips and cut prices, analysts have said.

"They've got to succeed with these products or they will fall pretty far behind the Intel treadmill," said Morgan Stanley analyst Mark Edelstone.

The new Athlon chip will be used in computers that are aimed at video-game players and consumers excited to own the newest and most powerful machines available, Advanced Micro said. The desktop version of Athlon 64 sells for US$417 in batches of 1,000.

Running 64-bit programs allows computers to access larger amounts of memory than 32-bit applications permit. That means people playing games, publishing newsletters or using computer aided design, or CAD, programs get better performance.

Athlon 64 and Opteron will still run 32-bit programs such as Windows XP and Microsoft Office. That's a benefit that Fred Weber, Advanced Micro's vice president of engineering, says will allow users to continue getting returns from their purchases of older software.