Thursday, January 06, 2011

TECH SHOW: AMD Launches New Chips In Latest Salvo Vs Intel


LAS VEGAS -(Dow Jones)- Advanced Micro Devices Inc. (AMD: 8.89, 0.00, 0.00%) unveiled on Wednesday new chips that are expected to reduce production cost and boost performance, the latest salvo in its competition with rival Intel Corp. (INTC: 20.93, 0.00, 0.00%).The Sunnyvale, Calif., chip designer's next-generation line of chips, dubbed "Fusion," pairs a traditional computer microprocessor and a graphics processor on the same piece of silicon. The combination is expected to lower production costs, improve performance and lower power consumption compared to the current practice of using two separate chips with specialized tasks.

"The importance of graphics has become more and more clear to our customers," AMD Chief Executive Dirk Meyer said at an event at the Consumer Electronics Show in Las Vegas. "The near-term performance of Fusion is to bring a better visual experience to notebooks."AMD tipped its hand in a press release Tuesday that said Fusion would be displayed at the trade show.

Fusion is AMD's latest step in its competition with giant Intel, which is expected to release a similar chip later Wednesday at CES. AMD has long lagged Intel in the microprocessor market because its chips have been seen as comparatively weak and inefficient.

AMD said desktop, laptop and netbook computers featuring its new processors are already available and that it expects manufacturers, such as Dell Inc. (DELL: 13.89, 0.00, 0.00%) and Hewlett-Packard Co. (HPQ: 44.21, 0.00, 0.00%), to announce plans to sell notebook computers using the technology for between $300 and $500. Tablet computers with the new chips are expected to be available in coming months.

AMD largely missed out on the last hot portable product line--netbook computers--and the company expects its new Fusion chips will help it expand in that market. While AMD has said it isn't targeting the fast-growing tablet-computer market, the company has said some personal-computer makers likely will use its semiconductors for such portable devices.

Already, Acer Inc. (ACEIY) has unveiled plans to use an AMD Fusion chip in a Microsoft Corp. (MSFT: 28.01, 0.00, 0.00%) Windows-based convertible tablet computer expected to hit the market in January.

AMD's Meyer also said he doesn't feel pressure to enter the smartphone market, where he said at least seven chip makers--including Qualcomm Inc. (QCOM: 52.03, 0.00, 0.00%), Broadcomm Corp. (BRCM: 43.84, 0.00, 0.00%) and Intel--are competing fiercely to capture market share. Earlier in the day, Qualcomm said it had agreed to buy Wi-Fi chip maker Atheros Communications Inc. (ATHR: 44.63, 0.00, 0.00%) for $3.1 billion in a bid to grab a larger chunk of the mobile market.

"While there are a lot of units there, the revenue [from smartphones] is smaller," Meyer said.

AMD and other semiconductor makers have been benefiting from a sharp rise in demand following the depths seen in the recession, but many chip makers, including AMD and Intel, have warned of weaker consumer demand for PCs in developed markets. Still, AMD in October posted a 16% rise in third-quarter revenue as the weak consumer demand didn't take as large a toll as feared. The company will reports its fourth-quarter results later this month.

In early afternoon trading Wednesday, AMD shares, down 12% over the past 12 months, were up 1.1% at $8.86.

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