Intel releases faster processor

BUSINESS DIGEST

June 27, 2006|By BLOOMBERG NEWS

SAN FRANCISCO -- Intel Corp., the world's largest computer-chip maker, has released a new processor for servers that runs faster and consumes less power as the company seeks to win back sales lost to chief rival Advanced Micro Devices Inc.

Intel Vice President Tom Kilroy showed a system based on Intel's new chip working in competition against an Advance Micro chip-based machine at a presentation yesterday.

"We're back in the position we're used to being in, that's undeniable leadership," he told an audience of analysts.

Intel's chip, a new version of its Xeon product known as Woodcrest, marks the first of three new models that Chief Executive Officer Paul Otellini is rushing out after gains by Advanced Micro lowered his company to less than 80 percent of the market for the first time in more than four years. Intel is leading off the product introductions with servers, the computers that run corporate networks, because that is where the chip maker has posted its most significant losses.

"It's a crucial chip for them because it's going to be their flagship in competing with AMD in the server space," said Krishna Shankar, an analyst at JMP Securities in San Francisco. "It's AMD's Opteron server chips that have done the most harm to Intel."

The new server chips, as well as fresh desktop models scheduled in coming months, strike a better balance between making computers run faster and helping them use less electricity, Intel said. Some of Advanced Micro's gains have stemmed from advertising around its lower-power features.

Intel, the worst performer on the Dow Jones industrial average this year, rose 28 cents to close at $18.28 on the Nasdaq stock market yesterday. The stock has dropped 27 percent this year.

The new server chips cost as much as $851 each in batches of 1,000. They more than double performance on certain measures and use as much as 40 percent less power, the company said. That gives Intel the lead on both performance and efficiency again, said Kirk Skaugen, vice president of Intel's server business.

"Shame on us," Skaugen said in an interview yesterday. "We did get behind on performance."

Intel slumped to 78 percent market share in server chips by unit shipments at the end of the first quarter of 2006 from 95 percent in the corresponding period two years earlier. Advanced Micro Devices has 22 percent of the market.

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