PC buyers eagerly awaiting new chips from Advanced Micro Devices Inc. (AMD) won't be pleased by a new report from chip analyst Ashok Kumar at Loewenbaum & Co.
Kumar says that AMD's well-publicised manufacturing-yield problems may prevent it from effectively competing with Intel over the next year.
AMD is currently switching over to a smaller die size for its 266-MHz K6 processors, moving from 0.35 to 0.25, or quarter-micron. The change is necessary in order for AMD to get higher clock speeds, according to Kumar. But he says engineering problems have caused AMD's plant in Austin, Texas, to struggle along with yields of one percent -- that is, 99 of every 100 wafers get thrown away. Yield is much better at AMD's Santa Clara, California-based plant, at about 45 percent. The result of these yields is not enough K6 chips to meet demand from AMD customers such as Compaq, IBM, Digital, and many second- and third-tier PC vendors.
Besides these problems, Kumar says AMD seems to be struggling with its new K6-3D processor, which the company has positioned as its high-end flagship product for 1998. AMD was promising clock speeds between 300 and 350 MHz, just high enough to keep it competitive with Intel's forthcoming Mendocino processor, a 300-MHz Pentium II with 128KB of L2 cache. Mendocino, according to Kumar, will be Intel's entry-level processor by next winter.
But the K6-3D, which is being tested now, has also run into performance problems that may keep it from competing with Mendocino. Kumar says AMD will have to significantly improve its execution. Otherwise, the company that was supposed to be building Pentium killers could find itself taken out by its own killer instead.