AMD sees bigger gains in war with Intel
No. 2 chipmaker aims to supply a third of the computer chip market by 2008, up from about 21 percent now.
By Amanda Cantrell, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - Advanced Micro Devices aims to boost its share of the market for computer chips sharply in coming years as it battles its far larger rival Intel, a senior AMD executive said Thursday.

The No. 2 chipmaker expects to be able to supply a third of the market for microchips by 2008, AMD (Research) senior vice president Daryl Ostrander said at the company's annual analyst meeting, up sharply from current levels. The ambitious goal underscores AMD's aim to grab even more market share from Intel (Research).

AMD's chief technology officer, Phil Hester, said the company is also launching a new laptop chip that will debut some time in 2007 and aims to improve battery life. Earlier this month, the company unveiled its first dual-core chip for laptops, a rebuttal to a similar product released by Intel earlier this year. A dual-core chip is essentially one processor with two brains.

Hester also said the company will focus heavily on chips for PCs below $1,000 over the next few years, another sign that it plans to gain share against Intel.

"It's the right thing to do and it's a great business opportunity for us," Hester said. "We believe if we don't start now we will not get the solutions the market wants in the next two or three years."

AMD boosted its share of the overall chip market to 21.4 percent versus Intel's 76.9 percent as of the end of 2005, according to industry tracker Mercury Research. That's the first time AMD has cracked the 20 percent mark since 2001, and it is up from 16.6 percent in the fourth quarter of 2004 -- almost all at the expense of Intel.

AMD chief executive Hector Ruiz also took a swipe at Intel without mentioning the company by name.

"We need to break free from the illegal stranglehold that a monopoly has on this industry," Ruiz said at the meeting. AMD filed an antitrust lawsuit against Intel in federal court last year, a case that's ongoing. Intel has denied engaging in anti-competitive practices.

While AMD is a fraction of the size of its chief rival, it's caught Intel flat-footed on some key technology advances.

Once known as a maker of lower-cost chips, the company started grabbing market share from Intel after industry analysts praised some of its chips, such as its multi-core processors, as being more advanced and better-performing than Intel chips.

The company scored another major coup when No. 1 PC maker Dell announced earlier this month it will use AMD chips in some of its high-end servers. Dell has previously used only Intel chips.

Earlier this week, AMD said it will upgrade and expand its two manufacturing facilities in Germany, spending $2.5 billion over three years on the project.

Meanwhile, Intel has been operating in full mea culpa mode.

"In the short term, we had products that were not as high in performance as our competitor, and because of that we lost market share," Boyd Davis, director of marketing for Intel's server business, said Thursday at a Citigroup Semiconductor Conference in Boston. "Our first order of business is to make sure we deliver competitive products."

Both the AMD and Intel presentations were monitored via Web cast.

Last month, Intel CEO Paul Otellini announced a broad restructuring that will address all aspects of the company's business.

Otellini said Intel will conduct a 90-day review to see what areas need to be revamped and said the company will reveal more details in the third quarter. He said the company will cut $1 billion in spending in 2006 but did not comment on whether there will be job cuts.

Intel also unveiled a plan to regain lost market share, launching several new processors and trimming inventory in an effort to regain investors' confidence. Some analysts say some of Intel's new processors will help Intel erode AMD's market share gains.

Reuters contributed to this report.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.