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Toshiba to use AMD chips in laptops

Toshiba Corp, the world's fourth-largest maker of notebook computers, said it plans to use Advanced Micro Devices Inc (AMD) computer microprocessors in some of its laptops, ending an exclusive agreement with Intel Corp that began in 2001.

Toshiba will use AMD's chips in about 20 percent of laptop models sold in the US and Europe, Tokyo-based spokeswoman Junko Furuta said by phone yesterday, confirming a report in the Nihon Keizai Shimbun business newspaper.

The microprocessors, which are the main brains of computers, will be used for Toshiba's low-priced models from this summer, she said, but declined to be more specific.

The decision means Intel is no longer the sole chip supplier to the world's top laptop makers.

Hewlett-Packard Co and Dell Inc, the world's largest personal-computer makers, already sell models that are equipped with AMD chips.

Taiwan's Acer Inc, the world's third-largest manufacturer, also uses AMD chips.

"The use of Advanced Micro's chips will lead to a reduction in procurement costs," said Yuichi Ishida, an analyst at Mizuho Investors Securities Co.

"Lower costs and a possible increase in sales during the Christmas shopping season may help improve profitability at Toshiba's computer business," Ishida said.

The Nikkei reported yesterday that Toshiba could cut its parts-procurement costs by more than 10 percent by using Sunnyvale, California-based AMD chips.

Furuta declined to comment on the possibility of reduced procurement costs.

"It's generally considered a good practice for a major company such as Toshiba, which is a strong presence in the laptop area, to have dual sources," Derek Lidow, chief executive officer of research firm iSuppli Corp, said yesterday in a television interview.

"It reduces the risk in supply chain" while creating more competition, he said.

Laptops delivered to the US and Europe account for about 60 percent of total shipments, Toshiba spokeswoman Furuta said, declining to say how many laptops Toshiba ships annually.

"Using chips from Advanced Micro will allow Toshiba to expand its product line-up," she said.

Toshiba forecast its laptop sales would increase 2.9 percent to ¥1 trillion (US$8.2 billion), or 13 percent of the projected total revenue of ¥7.5 trillion, for the 12 months that ended in March.

Operating profit, or sales minus the cost of goods sold and administrative expenses, is expected to jump 74 percent to ¥12 billion, it said.

The company, which is also the world's second biggest maker of NAND flash memory after Samsung Electronics Co, said that sales from semiconductors would likely increase 4 percent to ¥1.35 trillion this fiscal year.

Operating profit is projected to decline 14 percent to ¥110 billion, it said.

In the late 1980s, Toshiba invented the NAND flash that are now used to store data storage in mobile phones, digital cameras and portable music players.

Shares of Toshiba stock rose 1.2 percent to ¥908 at the close on the Tokyo Stock Exchange yesterday, compared to a 0.5 percent gain for the benchmark Nikkei 225 Stock Average.
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