Advanced Micro Devices will start phasing out its value Duron processor line by the end of the year in favor of Athlon for all price ranges, Chairman W. Jerry Sanders late Wednesday told a financial analysts conference call.
That's when Fab 25 in Austin, Tex. completes the conversion from making Duron processors to becoming 100% a flash memory facility. That will leave processors only being fabricated at AMD's Fab 30 in Dresden, Germany, and at foundry UMC in Taiwan, Sanders revealed.
"We believe the (manufacturing) cost advantage of copper and 0.13-micron (processing) will enable Athlon to be competitive in price and performance in all markets," Sanders asserted.
However, one last Duron breath of life will come this quarter when AMD introduces its 0.13-micron Appaloosa, the equivalent of the first 0.13-micron Thoroughbred Athlon processor unveiled earlier in the day.
Sanders didn't comment on the Duron Appaloosa but pointed out that all 0.13-micron processors are the same die size and produced in Dresden. "The only difference is (on-die) L2 cache and the front side bus speed," he said.
Sanders disclosed for the first time that Athlon 0.13-micron proces technology would be transferred to UMC in the second half "and (UMC) product shipments would come early next year."
AMD President Hector Ruiz said one driving reason for the early Athlon processor out-sourcing to UMC is the expected fast ramp at Dresden to the upcoming next generation 32-bit/64-bit Hammer family. "We intend to have (Dresden) Fab 30 to become dedicated to Hammer. We will use UMC to make a large number of Athlons tomeet the market needs," he said.
Ruiz said even as the PC Claw Hammer and high-end Sledge Hammer processors ramp up to dominate the AMD processor line in the coming years, "there will still be a good market for Athlon" for some time to come.
Sanders said AMD has achieved first silicon of its 100 million transistor nine-layer interconnect SOI Sledge Hammer chip. "It should be on the market early next year to compete against the (Intel Corp.) Itanium," he said. The PC Claw hammer version is on track for release later this year.
The AMD Chairman also hinted that Microsoft Corp. may be working with the firm on developing a 64-bit operating system extension to the existing 32-bit Windows versions for the Hammer series. "We gave working (Hammer) samples to Microsoft.
We have them working code. Microsoft now must make the determination what to do and when," he added.
One analyst asked if Sanders' highly supportive of Microsoft testimony earlier this week in the remaining states' trial on the antitrust remedy was a "quid pro quo" to get the software giant's backing for Hammer. "The press tried to tie my
testimony as a favor to Bill (Gates) and asking a favor in return. There was no quid-pro-quo. I am just a great believer that (open) Windows operating system is very valuable for industry. I was very happy to testify."
AMD earlier this year announced a joint venture partnership with UMC to build a 300mm wafer fab in Singapore, but that isn't slated for production until 2005. At the time AMD hinted it might use UMC to out-source some processor production
before then, but not until Wednesday were the outlines of such large-scale planned foundry orders made known.
Ruiz also disclosed that AMD's 0.13-micron wafer production at Dresden was accelerating and the total transition to the next chip node had moved up by one quarter -- presumably to the end of Q3 '02.
In other questioning, Sanders claimed AMD had held its market share against Intel in the first quarter, without specifying a percentage. However, he said AMD shipped a record 8 million processors in the quarter out of an industry total of 41 million processors, which works out to 19.5% AMD market share.
He asserted that AMD actually gained market share among PC makers except for Dell Computers, "which is exclusively an Intel house." And since he said Dell was the only PC firm with major growth in the market, and AMD was locked out at that firm, "we did extraordinarily well." However, he felt if Dell continued to be the only growing PC maker, "we probably can't increase our market share this quarter."
AMD reported processor revenue in the first quarter of $684 million, down from $703 million the previous period but up slightly from the same quarter a year ago.
Flash memory had revenues of $160 million, down from $196 million sequentially and down from $411 million on a year-to-year basis. However, Sanders felt for AMD the revenue bottom had been reached and sales should increase in the second
quarter. He said the glut of customer inventories has been worked down, and AMD has won significant new design wins among major customers, including Nokia.
Sanders told analysts they could work out AMD's break-even point, based on the firm's previous contention it would reduce costs $100 million in 2002, which would work out to $875 million break-even in the second quarter. "If total sales come in at $900 million in the quarter, we will make a profit. If they come in at the lower $840 million range of our estimate we will lose money."