Breaks Intel's 386 monopoly

CHIPPING AWAY AMD

April 01, 1991|By Los Angeles Times

SAN FRANCISCO -- One of the most lucrative monopolies in American industry was finally broken last week when Advanced Micro Devices formally rolled out its long-awaited clone of Intel's 386 microprocessor, a computer-on-a-chip that forms the brain inside many popular personal computers.

But the AMD 386, which remains the focus of a bitter legal battle between AMD and Intel, is expected to capture only a small fraction of the PC microprocessor market. Major personal computer vendors are reluctant to risk alienating Intel by buying the AMD chip, and Intel will soon fight back with cheaper and faster versions of its more advanced 486 microprocessor.

Still, the new 386 will be a boon for loss-plagued AMD even if the chip does little damage to Intel, analysts said.

"This is great news for AMD," said Dean McCarron, an analyst with the chip research firm In-Stat in Phoenix. He said the 386 market is worth about $700 million a year and called AMD's goal of a 10 percent share "realistic."

Mel Phelps, semiconductor analyst with Hambrecht & Quist, said AMD could expect to bring in about $50 million from 386s this year and, in the best case scenario, could sell $100 million worth this year and as much as $200 million to $300 million next year.

The 386 is the most popular member of the family of Intel-designed microprocessors that define a personal computer as IBM-compatible.

AMD, which pegs the 386 market at $1 billion a year and growing, said its 386 is about 20 percent faster than Intel's and sells for the same price. The company also introduced a version of the chip designed for portable PCs that uses less power than Intel's. The Intel 386 has often been in short supply since it was introduced five years ago, and AMD is counting on orders from smaller PC companies that have not been able to get as many chips as they want from Intel.

Leading PC vendors such as IBM, Compaq Computer and AST Research are expected to bypass the AMD product, however. They are concerned about possible compatibility problems, outstanding legal issues and -- perhaps most important -- preservation of a priority relationship with Intel.

AMD says the chip has been tested exhaustively by more than 20 PC vendors and an independent lab to ensure complete compatibility, but even a small glitch could spell trouble.

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