Computer Industry Races to Clone Popular Chips AMD Plans to Slice into Some of Intel's Market with Its Own 486 Chip

By Laurent Belsie, writer of The Christian Science Monitor | The Christian Science Monitor, April 23, 1993 | Go to article overview

Computer Industry Races to Clone Popular Chips AMD Plans to Slice into Some of Intel's Market with Its Own 486 Chip


Laurent Belsie, writer of The Christian Science Monitor, The Christian Science Monitor


THE race is on to build the computer industry's most popular microprocessor: the 486. Industry-giant Intel Corporation has had the 486 market to itself since introducing the chip in 1989. But yesterday, rival Advanced Micro Devices (AMD) began shipping a cloned version of the product.

The Sunnyvale, Calif., chipmaker expects to sell hundreds of thousands of its Am486s this year. That is a modest amount, less than 5 percent of the total estimated market. Next year, "we have a shot at between $400 million and $800 million in revenues from the 486," says AMD chairman W. J. Sanders. The company's first-quarter revenues were $407.4 million.

AMD's sooner-than-expected entry into the market bodes well for computer buyers long term. Prices for the 486's predecessor, the 386 chip, fell precipitously after AMD entered the market.

"By the end of '94, the prices of 486s will be a lot lower than they are today," says Michael Slater, editor of Microprocessor Report, an industry newsletter in Sebastopol, Calif. The high-end chip could sell for half what it does today, he adds.

But chip prices will likely remain stable for months, analysts say. For one thing, demand for 486s has outstripped supply for many months, Mr. Slater says. Both companies - AMD and Intel - will probably sell all the chips they have without cutting prices. For another thing, AMD is severely limited in how many chips it can produce.

Until 1995, when it completes a new $700-million plant in Austin, Texas, the company will have to use its research-and-development center for full-scale 486 production. The company is also said to be looking for existing foundries to make Am486s. But there are few idle chip foundries with the sub-micron fabricating technology to make the Am486, analysts say.

Microprocessors are the powerful semiconductors that lie at the heart of personal computers. Companies that first come out with new generations of these chips can reap monopoly sized profits. Intel has held that premier position since it ended a technology-sharing pact with AMD in the mid-1980s.

For example, Intel introduced the 386 microprocessor in 1985. Because of a long-running legal battle over the technology-sharing pact, AMD did not win the right to produce a 386 clone until 1991. The company planned to start selling a 486 clone last December, Mr. Sanders says. But a federal jury ruled that the company could not use Intel's 486 microcode. …

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