Intel vs. AMD: An Epic Continues

SAN JOSE, Calif. — For years, Intel Corp. and Advanced Micro Devices Inc. have battled each other in the x86-based microprocessor business.

But in 2005, Intel verses AMD reached epic proportions: Call it a new and memorable chapter in the ongoing battle between the semiconductor industry’s version of David and Goliath.

In 2005, AMD smacked mighty Intel with a stone from its proverbial slingshot, sending the microprocessor giant back on its heels — at least temporarily. Microprocessor supplier AMD scored a minor victory in its long uphill fight to wrestle the processor market from Intel, as the company overtook its archrival in the U.S. retail PC sector in October, according to market research firm Current Analysis.

Intel took AMD’s best shots in 2005, including a lawsuit, a slew of antitrust complaints and the ongoing introductions of arguably a better microprocessor design for servers. Yet Intel regained its balance and is still standing, vowing to fire back with a vengeance with products at the 65-nm node in 2006.

Needless to say, it was a memorable year for the two companies. In June, for example, Intel was hit by a suit from rival AMD, which made various claims against its rival.AMD alleged that its archrival has been operating an unlawful monopoly in the x86 microprocessor market and has coerced computer makers, distributors, small system builders and retailers in their dealings with AMD. The complaint identifies 38 companies that AMD alleges have been victims of coercion by Intel. It also claims seven illegal tactics across three continents.

AMD said Intel had about 80 percent of worldwide x86 microprocessor sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and excessive market power. Intel denied the accusations, with chief executive Paul Otellini saying the company will not alter its practices.

Also, European authorities are probing Intel business practices on their continent. They are receiving help from Japanese officials, who in March managed to get Intel to stop unfair trade practices by its Intel K.K. subsidiary.

And antitrust authorities in Korea in August started looking into shaky rebate and marketing deals Intel has made with personal computer manufacturers there, according to a regulatory filing.

On the marketing front, Intel and AMD are preparing to square off again with next-generation products, which are expected in 2006. In addition, AMD recently opened up its first 300-mm fab.Not to be outdone, Intel outlined its strategy to fend off competitive pressures from its rivals, especially at the 65-nm node. At an event, Intel re-announced its roadmap of dual-core mobile, desktop and server processors at the 65-nm node. The company also claimed that it will have no less than four wafer fabs in its arsenal that will manufacturer chips based on the 65-nm process.

Overall, Intel has invested more than $4 billion in new fabs and upgrades this year alone. These investments will add over 2,000 jobs for the company, according to Intel.

But amid the noise, hype and confusion, there are some lingering questions: Can AMD gain significant share from Intel in 2006 and beyond? And do consumers really care about so-called multi-core processors?

AMD could gain share if one or a combination of events takes place: 1) Intel badly stumbles with its roadmap in 2006; 2) the corporate market embraces AMD in a big way; 3) Intel-based backer Dell finally adopts AMD’s Opteron chips for its servers.

On the first point, Intel has stumbled in the past. For example, in 2005, the company rushed out a dual-core design, which turned out to be two processors slapped together in a single package.Here’s the real key: Can Intel get its new “micro-architecture” processor designs out the door by the second half of 2006, as it has previously stated? The 65-nm, dual-core products will replace the company’s old and tired Pentium-based NetBurst architecture lines. Processor products based on the new technology include codenamed Tulsa and Woodcrest for servers, Conroe for desktops and Merom for notebooks.

Intel will likely ship the products in time, but they had better show a real performance benefit. AMD’s Opteron chip, which integrates the memory controller on the same circuit, proved to be a better design than Intel’s Xeon 32/64-bit processors.

Still to be seen, however, is if or when Intel will develop its own processor with an integrated memory controller. It, however, could be a moot point: the company with the best product sometimes never wins.

And at least for the foreseeable future, Intel will continue to dominate the corporate or business world — much to the chagrin of AMD. AMD has a tiny share of the business market and the old adage rings true with IT managers: “You can’t get fired by buying Intel-based PCs.”

This could change if — and only if — Dell switches camps and adopts AMD’s Opteron processor for a server design. Analysts have urged Intel-based backer Dell to jump on the Opteron, but don’t hold you’re breath unless Intel badly stumbles and fails to deliver.Intel also hopes to regain lost share in the consumer space, thanks to Apple Computer Inc. Apple is reportedly readying its first product based on an Intel part. Apple is said to be using Intel’s Napa mobile platform in an upcoming laptop.

More importantly, the question is whether or not consumers really care about the newfangled processor designs in PCs. Not long ago, consumers became somewhat savvy when it came to PC technology, including the make and model processor. Those were the days when speed grades and megahertz mattered to run new and complex applications and games.

Now, as the world shifts towards complex dual-core, low-power processor designs, consumers are bound to become more confused and less interested in the make, model, speed and identity of the processor.

Just like the megahertz race, the “Intel Inside” moniker could become a thing of the past.

(Return to the 2005 Top 10 story list or go to No. 30