Intel: Planning the next move
Published: 16 May 2001 13:52 BST
Although it gained only a couple points of market share, AMD's gains are greater when measured in dollars because the company charges more for Athlon than for its older K6 processors. Taking advantage of a weak point, AMD caught its archrival at the tail end of a product cycle. Intel tried to counter with its aging Pentium III design, but that chip barely made it to 1GHz even as Athlon soared as high as 1.2GHz.
Intel subsequently brought out the faster Pentium 4 at the end of last year, but that chip remains expensive and available only in limited quantities. The initial Pentium 4, code-named Willamette, has a relatively large die size, which increases its cost and limits production. Furthermore, Pentium 4 is available only with Rambus memory, which is also expensive and in short supply. In brief, all this has made it difficult for Intel to position its fast processor against Athlon.
Ramping up P4 and beyond
The problem should be alleviated over the course of this year, but it will still take another year before the Pentium 4 really hits its stride. First, Intel is increasing capacity in the 0.18-micron fabrication plants that can build Pentium 4. In fact, the shortfall in PC sales is actually accelerating the transition to Pentium 4. This is because the fewer chips Intel needs to build, the more capacity it has left over for the large Willamette die.
This summer, Intel is expected to introduce a new chipset, code-named Brookdale, which combines Pentium 4 with low-cost SDRAM memory. While SDRAM will reduce the cost of Pentium 4 systems (compared with Rambus memory), it also reduces system performance significantly. Some consumers may not notice or care, but others will avoid the SDRAM boxes.
In the fall, Intel plans to roll out a 0.13-micron version of the Pentium 4 known as Northwood. In this next-generation process, Northwood will be a fraction of the size of Willamette. This change will reduce Intel's cost to build the Pentium 4 and will allow the company to greatly increase production levels. In addition, Northwood will push the Pentium 4's clock speed to 2GHz and beyond.
Finally, in early 2002, Intel plans to upgrade Brookdale to support DDR SDRAM. This memory combines high performance with low cost. Northwood systems with DDR SDRAM will offer price and performance well beyond what AMD will have. This combination should allow Intel to take back some of the market share it has lost to AMD.
Intel is laying the groundwork to gain market share with a huge investment in manufacturing facilities. The company plans $7.5 billion in capital expenditures this year and has not trimmed these plans in the face of falling revenue. This investment is crucial for the transition to 0.13-micron manufacturing and to 300-millimeter wafers. As noted above, 0.13 micron offers both lower cost and higher speed, an irresistible combination.
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