AMD Boosts Lead Over Intel With New Version of Its Athlon Chip

SAN FRANCISCO —  Advanced Micro Devices Inc. has maintained its position one step ahead of Intel Corp. in the race for the fastest Windows-compatible microprocessor, introducing a 700-megahertz version of the Athlon chip Monday.

AMD has historically trailed Intel’s fastest processors, but has overtaken the industry leader with the new Athlon. Analysts say the Athlon, which will be used by Compaq Computer, IBM and other manufacturers in their most powerful PCs, is significantly faster than Intel’s flagship Pentium III, which runs at a top speed of 600MHz.

The machines will appeal to the most demanding users who need top performance for graphical modeling and working with large database files, and by avid gamers who look for crisp, realistic screen images.

AMD’s lead may be short-lived, however; Intel is expected to release a new Pentium III that will run as fast as 733MHz at the end of this month .

“We are seeing very healthy competition between two capable vendors,” said Nathan Brookwood, an analyst with Insight 64 in Saratoga, Calif. He and other industry watchers expect the forthcoming Pentium III to roughly match the new Athlon’s performance, depending on the type of software application being used, and for AMD and Intel to leapfrog each other in top performance over the next six months.

AMD has staked its future profitability on Athlon, which sells for $849 in lots of 1,000 for its fastest iteration--far above the average price for other AMD products. In general, AMD attempts to undercut Intel’s prices.

Shares in Sunnyvale, Calif.-based AMD gained 63 cents Monday to close at $17.88 on the New York Stock Exchange.

Also Monday, Intel dubbed its next-generation processor architecture “Itanium.” The chip family, previously known by its code name “Merced,” will be critical to Intel’s strategy to move up the processor food chain. It now dominates the chip market for PCs and has a strong presence in the market for small server computers, but would like to supply the most powerful servers and supercomputers needed by large corporations and Web-based businesses.

The first versions of Itanium will be on the market in the second half of next year, according to Intel.

The chip uses a 64-bit architecture--meaning that it can process information in segments twice as large as today’s 32-bit chips, resulting in much faster performance.

“We think that this new architecture has enough headroom to last the next 25 years,” said Stephen Smith, Intel’s vice president in charge of the Itanium line.

He added that it will be backward compatible--that is, machines based on the chips will be able to run software applications written for earlier generations of processors.

They will also support most of the major software operating systems for workstations and servers, another key selling point in the battle against Sun Microsystems and IBM, whose most-powerful server chips do not offer such broad flexibility.

“[Itanium] has tremendous potential to steal share from those other leaders if it delivers on its performance promises,” Brookwood said.

On Monday, Intel shares rose $2.06 to close at $77 on Nasdaq.