Head of AMD’s Microprocessor Unit Quits

Advanced Micro Devices Inc.’s executive in charge of its microprocessor division resigned Thursday, raising concern about who will lead the computer chip maker’s charge against rival Intel Corp.

Vinod Dham, 47, was group vice president of AMD’s computational products division, which makes the K6 processor. Dham worked for 16 years at Intel, where he headed the group that designed the company’s best-selling Pentium chip.

“It’s definitely a loss for AMD,” said Risto Puhakka, an analyst at VLSI Research. “He was considered a gem. This may be a reflection of the difficulties with the K6.”

AMD has been hurt by its inability to make enough of its K6 chips, the brains of a personal computer, to compete with Intel’s Pentium chip. There were also numerous delays with the K6, which was more than a year late in coming out.

“[Dham] might be the scapegoat for the K6 problems,” said analyst Ashok Kumar of Southcoast Capital Corp.

Dham was responsible for the unit during the time of the introduction delays and manufacturing problems. In the last two weeks, a management shuffle effectively demoted Dham by having him report to someone other than Chief Executive Jerry Sanders, Kumar said.

Dham also was seen by some as the scapegoat for Intel’s famed Pentium flaw in 1994. Dham had been head of the original group that designed the chip, which was found to have a bug that resulted in incorrect answers in certain complicated computations.

Analysts also said Dham’s resignation may have been a result of internal turmoil with Sanders, the flamboyant founder of AMD who has a reputation as a stellar salesman with a temper and difficult personality.

When AMD said in 1995 that it planned to buy Nexgen Inc., Sanders and others identified Dham as the most crucial person in the acquisition and in making the K6 chip, which was a Nexgen product.

Two people will replace Dham as co-general managers of the group: Rob Herb, 36, vice president of strategic marketing for the computational products group, and Larry Hollatz, 55, former vice president of the Texas microprocessor division.

“There’s a void they have to fill,” said Eric Rothdeutsch, an analyst at Volpe Brown Whelan & Co. in San Francisco, who has a neutral rating on the stock.

Rothdeutsch expects Sunnyvale-based AMD to make 1.5 million K6 chips in the fourth quarter. It previously said it had a goal of 2 million.

AMD shares rose $1.19 to close at $21.13 on the New York Stock Exchange.