AMD, Intel Prepare to Duke it Out on Quad-Core Front

In the wake of drastic Athlon 64 price reductions and the US$5.4 billion merger with ATI, AMD is making another competitive move against rival Intel, demonstrating its 4×4 platform aimed at dethroning Intel’s quad-core.

The demonstration was a preemptive strike against Intel’s dual-core chip releases due on Thursday. Intel, which, like AMD, has slashed chip prices recently, will show off what it calls smarter, faster and more efficient laptop and desktop PCs powered by the new Intel Core 2 Duo chips.

AMD’s innovation is welcomed, but the firms’ recent competitive pricing moves and the ATI acquisition have some analysts concerned about long-term impacts on semiconductor revenues.

“It seems like everybody outside of Intel and AMD are scratching their heads wondering what’s going on and if it’s beneficial for the industry,” IC Insights Senior Analyst Brian Matus told TechNewsWorld.

Intel’s Moves

To be sure, Intel has to be concerned about AMD’s market share gains in light of the big picture. Hewlett-Packard and Dell have each launched AMD-centered initiatives. AMD has an undisputed lead in the gaming market, and the company overall has gained credibility over the past few years.

Matus sees Intel’s pricing and innovation moves as a full-scale assault against AMD. He suspects Intel would rather not cut prices, but said the industry giant is better prepared to withstand a long-term price decline than AMD.

“Price cuts and innovation are the only ways Intel can regain market share it lost to AMD,” Matus remarked. “But what do they really gain beyond a few billion dollars in sales? Where do they go from there?”

Change in Focus?

Matus might ask the same question of AMD, which is sending some mixed signals to the market. The company has promoted the benefits of its open architecture, for example, but now seems to be moving toward a closed platform focus with a joint venture with ATI.

“AMD’s immediate goal seems to be to break the dominance of Intel’s monopoly with new product introductions, lower prices and this joint venture with ATI. AMD’s running theme right now is to break the monopoly,” Matus explained.

Of course, that is easier said than done, and AMD may be biting off more than it can chew with the ATI deal, Matus added.

Stopping the Bleeding

For now, AMD is trying to divert attention from Intel’s Thursday Core 2 Duo announcement. AMD insists its 4×4 system, featuring two dual-core Athlon 64 FX processors, is a better solution for high-load tasks such as gaming and multitasking than a single processor unit. The 4×4 platform sits in two sockets. Each processor is separately allocated up to 2 MB of cache.

Despite AMD’s best efforts, Intel is poised to leap out in front with its high-performance Core 2 Duo dual-core chips. AMD won’t launch its quad-core offering into the marketplace until the middle of 2007, at least six months after Intel.

The bloodletting may continue, though, as both companies race toward higher performing chips at lower prices, a scenario that analysts said is not good for either company. Falling prices hurt the bottom line of both companies and could lead to financial woes if the lower prices fail to generate greater sales figures.

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