Advanced Micro Devices Inc.

Advanced Micro Devices Inc. is California’s star member of the Standard & Poor’s 500-stock index, as measured by stock price increase over the last year.

Moreover, AMD’s 113% stock price surge was second overall in the S&P;, topped only by Dell Computer Corp. of Austin, Tex.

Nipping at AMD’s heels in this category is much larger Intel Corp.

That seems appropriate, as AMD’s stock performance in 1996--and its prospects for 1997--are closely tied to its efforts to win a bigger slice of the semiconductor pie.

Today, Intel clearly dominates the business. But AMD is poised to compete head-to-head with Intel now that it has introduced its K6 microprocessor.

Analysts expect the K6, with 8.8 million transistors and a top speed of 233 megahertz, to provide formidable competition to Intel’s Pentium II, due out this month.

Industry reviewers say the K6, which debuted in April, is nearly as fast as the Pentium II but will be priced about 35% lower.

Indeed, AMD’s main limit to growth could be the pace at which it can churn out the chips. The company plans to break ground on a new chip-fabrication plant and research center later this month and expects to be shipping millions of K6s by the second half of the year.

The Sunnyvale company’s finances are improving as well. After losing money in the last three quarters of 1996, it bounced back into the black in the first quarter of 1997, when it earned $13 million on sales of $552 million.

AMD’s stock, which hit a 52-week low of $10.25 in July, now trades at about $44, down slightly from a high of $48.50 in March.