Investor's Business Daily, February 27th, 2007
Advanced Micro Devices is taking aim at a new market, chip sets, in hopes of lifting its falling sales.
The move has been in the works since October, when AMD AMD bought ATI Technologies. ATI makes graphics chips and chip sets.
Chip sets are groups of chips that help a computer's main microprocessor with tasks. For example, a chip set assures the fancy graphics will show up on a PC monitor.
On Wednesday, AMD plans to unveil the 690 chip set, the first AMD-designed chip set ever.
And it's not just any chip set, says Phil Eisler, an AMD vice president.
"It has much better 3-D and video clarity than earlier chip sets," he said. "It's not just about (speed) any more. You have to deliver a singular experience to end users."
There are two versions of the 690 for desktop PCs, Eisler says. A version for mobile devices is slated to come out later.
The 690 is also a step toward AMD's goal of including graphics circuits on microprocessors. Neither AMD nor its rival in the microprocessor field, Intel INTC, can do that today. Intel, the world's No. 1 chipmaker by far, has long had a large chip set business. Intel hasn't yet revealed any plans to put graphics onto microprocessors. But AMD announced such plans right when it bought ATI, for $5.4 billion.
Eisler says AMD plans to bring out a microprocessor with graphics circuits by late 2008 or early 2009. It should lower costs for computers and devices that use graphics chips and microprocessors.
AMD is counting on chip sets to offset slowing growth in microprocessors. Its market share gains for the product have slowed as Intel has increased its pace of new-product rollouts.
The Sunnyvale, Calif., chipmaker doesn't plan to come out with a major new microprocessor until midyear. That chip, code-named Barcelona, will be AMD's first quad-core chip. Intel came out with its first quad-core in November.
In the meantime, AMD pins some growth hopes on chip sets.
It can be a big business. Intel's chip set and motherboard business amounted to $8.4 billion last year, 24% of its total sales. Intel doesn't break out chip set sales alone.
The other big chip set companies are Taiwan's Via Technologies and Silicon Integrated Systems, and Sunnyvale-based Nvidia NVDA. A specialist in high-end graphics chips, Nvidia was ATI's archrival.
ATI in the past made chip sets for both Intel and AMD PCs. Eisler says AMD doesn't plan to come out with new chip sets for Intel PCs.
Analyst Jon Peddie says AMD's entry into the market could hurt Via and SiS, which both sell chip sets for Intel and AMD computers.
Peddie, president of Jon Peddie Research, says, "the 690 really is a milestone. With (it) you can have a system that will run four monitors simultaneously. That's (a) first."
Copyright 2007 Investor's Business Daily, Inc.
