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Intel steps up pressure on AMD with Nehalem designs

Posted on: 29-Mar-2007

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Intel is stepping up the already-intense pressure on AMD.
Pat Gelsinger, general manager of Intel’s digital enterprise group, told reporters Wednesday that Intel’s next-generation 45-nm Nehalem processors are set for production in 2008, following Penryn 45-nm production in the second half of this year. Nehalem processors now in design have eight cores and 16 threads, with other designs moving beyond 8/16 to higher numbers of cores and threads, he said.
Steve Smith, Intel’s director of enterprise operations, told analysts Wednesday that Intel will ship 45-nm Penryn processors from two fabs in the second half of this year. Two more 45-nm fabs come on line in the second half of 2008.
The 45-nm process, with high-k and metal gate electrodes, will help keep power consumption roughly the same, as performance increases by 20 percent and transistor counts potentially double. Cache sizes will increase, even as the 45-nm process enables 25 percent die shrinks for some designs. Integrated graphics and memory controllers will come on board, Smith said.
Stock analyst Doug Freedman of American Technology Research sent out his take on Wednesday’s briefings, concluding that “it is becoming obvious that AMD's only weapon, outside of Barcelona this year, is price. Intel is moving to smaller die sizes as it moves down the process scale and will maintain a cost and performance advantage. With AMD's products getting stale in the channel, we believe Intel is firmly positioned to recapture share in the server space and high end while conceding lower margin portions of the market to AMD.”
Detailed indications of those price cuts from AMD and Intel were reported by CRN, the trade newspaper which tracks computer resellers.
The newspaper reported that in late April Intel is expected to announce 40 percent reductions on its quad-core processors, along with “significant” reductions to its popular Core 2 Duo designs. AMD will reduce price tags on its Athlon 64 processors, while leaving untouched its popular 4200+ processor.
Intel is clearly a wounded tiger fighting to restore its dominance.
In 2006, according to IC Insights, Intel saw revenues drop by 9 percent last year to $32.268 billion, while AMD enjoyed a 44 percent increase to $5.649 billion. However, with a heavy debt load from the ATI acquisition and a price war underway, analysts such as Freedman see hard times ahead for AMD.
How will AMD respond to Intel’s aggressive push at the 45-nm node? Will Barcelona, AMD’s quad-core design, and integrated graphics from its ATI acquisition, be enough?
And for Intel? Freedman remains “neutral,” targeting a $22 stock price as revenues decline slightly in the second quarter to $8.8 billion from an estimated $9 billion in the first three months of this year.

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