AMD and Intel in Fight for Computer Chip Sales

Article excerpt

CALL it a chip off the old Intel block.

Advanced Micro Devices (AMD) is getting ready to sell a new computer chip that will compete directly with the popular 80386 microprocessor sold by archrival Intel Corporation.

The AMD chip looks like Intel's 386 chip. It works like a 386. This week a federal judge is expected to rule whether it can be called a 386.

The Am386, as it is known, will be the first clone to break into the huge, $1 billion market that Intel has monopolized for six years. If sales take off, the new chip could be an important boost to Advanced Micro Devices (AMD), a struggling semiconductor manufacturer based in Sunnyvale, Calif.

Sales of the Am386 won't make or break the company, AMD executives say. "We will just be more prosperous sooner" if it succeeds, says Ben Anixter, vice president for external affairs. The company expects to ship the semiconductor soon, certainly by the end of the first quarter.

"It clearly would be very profitable" for AMD, says James Barlage, managing director of research for Smith Barney, Harris Upham & Co.

Microprocessors are the heart of a personal computer (PC). The 386 microprocessor is extremely popular because computer users are demanding faster and more powerful machines to handle increasingly sophisticated software. When Intel introduced its 8088 chip 12 years ago (which was used in the original IBM PC) it handled 330,000 instructions per second. Intel's next generation 80286 (used in the IBM AT) handled 2 million instructions per second. Its 80386 is two-and-a-half times faster still.

Computers built around the 386 have become the standard in the personal computer industry.

Intel has filed three suits against AMD since the two companies broke away from an agreement to trade chip technologies. In the case likely to be decided this week, Intel charges that the name 386 is a protected trademark that competitors cannot use. Intel has also sued AMD for using its microcode to build a clone of an earlier Intel chip. In the third case, an arbitrator has ruled against Intel for breach of contract. The arbitrator has not yet set damages. Andrew Grove, Intel's president and chief executive officer, declined to comment on the legal cases.

Analysts say the microcode suit represents the biggest threat to AMD, because it might force the company to write its own code for the chip. But the immediate prospects for AMD are good.

ACCORDING to AMD, customers have already reserved the first six months' production of the chip. …