Advanced Micro to Unveil K6-3 Chip to Fight Intel's Pentium III
California, Feb. 21 (Bloomberg) -- Advanced Micro Devices Inc., Intel Corp.'s biggest rival in the microprocessor market, tomorrow will unveil its K6-3 chip, aimed at both business users and home personal-computer buyers. The new chip, which will sell for $284 and $476 depending on its speed, is designed to compete with Intel's new Pentium III. Unlike previous AMD chips, it runs Microsoft Corp.'s Windows NT software at comparable rates to Intel's, AMD said. Windows NT is the Microsoft operating system used mostly by businesses. AMD needs new chips that command higher prices. Earlier this month, the company said it may report an operating loss in the first quarter because it's slashing prices to compete with Intel.
''The K6-3 outperforms the Pentium III,'' said Dana Krelle, a marketing vice president at Sunnyvale, California-based AMD. The challenge for AMD is making enough of the new chips. The company, which has long been dogged by production problems, stumbled in the fourth quarter when it reported weaker-than-expected earnings because of a design flaw in its K6-2 chip that rippled through the manufacturing process, hurting output. Personal computers built with 400-megahertz K6-3s are in stores now, AMD said. PCs built with the more powerful 450-megahertz chips will be out in March. Megahertz measures the speed at which a microprocessor handles instructions. AMD claims the new K6-3 running at 450 MHz will outperform a Pentium III running at 500 MHz because of superior design. The comparison is based on machines running Windows 98, AMD said. On Windows NT, Microsoft's more powerful operating system, the 450-MHz K6-3 is slightly slower than a Pentium III running at 500 MHz, Krelle said. AMD hopes the new chip will help it win sales of corporate PCs, a market controlled by Intel. AMD will keep making its K6-2 chip at higher speeds. It is about to unveil a new 450 MHz K6-2 that will sell for $203. The K6-2 has been one of AMD's most successful chips. By selling it at a discount to the Pentium, AMD took market share from Intel in the market for PCs costing less than $1,000, one of the fastest growing segments of the computer market. Intel countered by cutting prices on its low-end Celeron processor, making it more attractive to makers of cheaper PCs. That forced AMD to cut prices and warn of the possible loss. AMD shares rose 1/2 to 17 5/8 on Friday. They've fallen about 40 percent in the last three months. Shares of Santa Clara, California-based Intel fell 1/16 to 128 1/16 on Friday. They've risen 13 percent in the last three months.
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