NEW YORK -(Dow Jones)- Advanced Micro Devices Inc. (AMD) plans to announce on Wednesday the broad availability of its delayed chip for server computers, code- named Barcelona.
The Sunnyvale, Calif., company said the chip is shipping to all of its sales- channel partners, which are third parties that sell server systems tailored to the needs of corporate customers. The move follows its release last week of delayed Phenom chips for high-end personal computers, built using the same architecture as Barcelona.
AMD initially began shipping Barcelona in September, until it discovered a technical glitch that forced it to go back and make fixes at the silicon level. While the company has been able to ship parts to some key partners, AMD postponed full-scale production, forcing many to wait. That sparked investor concerns about its ability to deliver on promises and maintain marketshare in the face of its reawakened, much-larger rival, Intel Corp. (INTC). AMD shares, which have lost half their value over the last year, fell another 4.9%, or 31 cents, to $6.03 on Tuesday.
With Wednesday's news, AMD hopes to put the flap behind it. "We're off to the races now, and the product is out," said John Fruehe, worldwide market development manager at AMD. "All of the fixes are in place, and everything looks wonderful."
Officially named Quad-Core AMD Opteron, Barcelona breaks new technological ground by putting four calculating engines, or cores, onto one piece of silicon. By contrast, Intel's competing offering hooks together two dual-core chips to make four cores.
The chip was meant to be AMD's grand follow-up to its breakthrough dual-core Opteron chip, which allowed AMD during 2004 through 2006 to break Intel's hold on the server market and become a competitive force. However, the chip's delay has likely cut AMD's technical lead on Intel to about nine months, since Intel is expected to match most of AMD's innovations with its next-generation product, code-named Nehalem.
AMD's new chips, with clock speeds of 2 gigahertz to 2.3 gigahertz, are slower than Intel's current offering, mainly because Intel has moved to 45-nanometer process technology while AMD is still at 65-nanometers. AMD expects to ship models at 2.4 gigahertz and 2.5 gigahertz at the end of the second quarter, and it is slated to move to 45-nanometer in the fourth quarter. Nevertheless, AMD and industry analysts say Barcelona chips are superior to Intel's using some other measures, such as power efficiency.
Separately, AMD plans to announce on Wednesday that Hewlett-Packard Co.'s ( HPQ) Barcelona-powered ProLiant server has broken a key performance record for a four-processor server. H-P, which last week was the first manufacturer to unveil a product with Barcelona, said that, weighing cost against transactions per minute, it achieved a cost level at less than half that of its nearest competitor.
During the delay, AMD appears to have lost some market share to Intel. AMD's 2007 server unit share was 13.2%, down from 16.7% in 2006 but still ahead of its 9.4% in 2005, according to research firm Gartner Inc. Intel dominates the server business with more than three quarters of the market. Gartner said it expects Barcelona to modestly increase AMD's share and allow it to achieve a long-term level of about 20%.
Though AMD's overall processor sales fell 12% in 2007, they rose 9% in the final quarter of 2007, driven by a 22% increase in server-chip sales as AMD shipped 400,000 Barcelona chips to select customers, such as H-P. AMD predicted on its fourth-quarter conference call that it would double its quad-core shipments in the first quarter compared with the fourth quarter. However, AMD warned Monday that sales were weaker than expected across its business, suggesting it might not have achieved that goal.
Still, Fruehe was bullish, saying: "H-P is really the first shot in what is going to be a steady drumbeat of vendors introducing new servers based on the AMD quad-core Opteron processor."
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