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Is the Intel v. AMD chip war back on?

Is the Intel v. AMD chip war back on?

After struggling with delayed products and bad market and mindshare woes through 2007, a lot of industry pundits started writing off AMD. And while AMD struggled, Intel held strong over the last year and a half, coming out with quad-core chips and a 45-nanometer (nm) processor family and staying well ahead of AMD's roadmap.

Recently, though, AMD has begun showing some signs of life, pushing out a graphics chip set early this month, and a slew of new desktop processors this week. With the first AMD Barcelona-based systems expected to hit in April, and a 65-watt quad-core desktop chip and a triple-core desktop chip now in the mix, AMD may be starting to kick back into gear.

And that kind of renewed competition between the two processor giants can only be good for the industry, says Jim McGregor, an analyst at In-Stat in Scottsdale, Arizona.

"It's good to see AMD back in the game," he says. "They've still got a lot of issues to handle, especially financially. I don't know if I'd say they're in fighting shape. Once you dig a hole, it's hard to dig out of it. But they're definitely back in the game."

But as AMD picks up the pace, Intel isn't giving them a steady target.

Intel execs announced less than two weeks ago that they plan to start shipping a six-core processor to resellers in the second half of this year. With 1.9 billion transistors and 16MB of Level 3 cache, the six-core chip, code-named Dunnington, will be built with Intel's new 45 nanometer technology. At the same time, Intel announced that it will start production of its upcoming 45nm, four-core Nehalem chips in the fourth quarter of this year. And Intel's quad-core, 65nm Tukwila chip, an upgrade from the Itanium family, is due out by the end of the year.

Intel is expected to flush out more of its chip roadmap next week at its Intel Developer's Forum in Shanghai.

The competition and innovation would be even greater if both companies were in a position to light a fire under the other, says Nathan Brookwood , an analyst at research firm Insight 64 in Saratoga, California.

"I used to think that when both these companies were firing on all cylinders, it was like watching a tennis match between two world-class players," he said. "When you have those kind of matches, then the volleys go back and forth and back and forth until somebody gets a lucky break or makes a stupid mistake. I'm hoping there's enough karma in the universe for these companies to do really well in product design and hitting releases. Lately, it's seemed that there was only enough karma for one of them. But I'm not so sure that karma is a fixed quantity. It might be possible to create karma."

Dan Olds, an analyst at Gabriel Consulting Group in Beaverton, Oregon, said for AMD to truly be firing on all cylinders again, it needs to do more than get some new processors out the door. To get over its financial woes and regain its footing in the market, the company can't just play catch up with its main rival. AMD needs to start excelling past Intel, coming out with better, faster products.

"They need better price and performance at both the high- and low-end of the market to regain their mojo," says Olds. "The problem is that AMD's ATI purchase added a lot of debt and overhead to the company. They aren't as lean and mean as they were before. That means they need higher volume and profits just to stay even. In order to get those profits, they need to have products that are superior to Intel. Not the same as Intel's, but better? It could happen. They surprised everyone, including Intel, with Opteron."


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