Sanders wants to keep Intel honest

SAN JOSE, California--Advanced Micro Devices (AMD) is the last hope for microprocessor competition, according to the company's chief executive officer.

In his keynote speech at the Microprocessor Forum today in San Jose, California, AMD CEO Jerry Sanders told the audience that chip giant Intel has, and will continue, to keep microprocessor prices artificially high unless realistic competition can be brought to bear against the company. He added that only AMD, even with its current problems, fits the role of a competitor.

"In the absence of open competition, consumers will pay a monopolistic tax," said Sanders. "AMD is here to cut our taxes. It's the only player with a realistic opportunity to lead the way for an alternative Windows platform for computing."

Decked out in a Versace tie and various pieces of heavy gold jewelry, Sanders all but accused Intel of price gouging. Holding up a chart plotting Intel processor prices this year, Sanders said a direct correlation could be made between the price of Intel processors and the release of AMD's K6. The chart showed Intel prices on Pentium MMX and Pentium chips dropping drastically with the release of the K6 in April. By contrast, the Pentium Pro, a server chip that AMD does not compete against, has stayed relatively stagnant.

"It is clear that competition from AMD has driven Intel to drive new technology innovations and to drive innovations earlier," he added. "Since the release of the K6, prices have come down more sharply in an Intel offering than ever before."

Sanders also for the first time spoke publicly about the information the Federal Trade Commission is seeking in its investigation of Intel. Specifically, he said the agency wants information on whether Intel uses its dominant market position to force computer vendors "not to work with alternative vendors," whether Intel "manipulates technology standards," and whether Intel makes partners sign "nondisclosure agreements that are so unduly onerous that they have the effect of hindering competition."

Intel aside, Sanders conceded that AMD has to improve its manufacturing and operations as well as seal more deals with major PC vendors. Pointing to another graphic, the CEO showed how AMD has gone from a 30 percent market share in 1992 to an approximate 10 percent share this year.

To become a credible alternative again, the company will have to achieve a 30 percent market share by 2001, Sanders noted.

AMD's comeback will largely depend on the upgraded microprocessor described at the convention. Under a road map laid out today, AMD will release a version of the K6 using the Accelerated Graphics Port (AGP) before the end of the year as well as logic chipsets that will allow the processor to take advantage of AGP.

Then, in first half of 1998, AMD will release a new version of the chip called the K6-3D, a new version of the chip with a new instruction set for processing 3D graphics. The company will license this technology to other providers. (See related story)

The K6 3D also will contain a 100-MHz system bus and a separate bus for the "Level 2" (L2) cache. Speeding up the bus and adding a separate, second bus will improve overall processor performance. Processor speeds on this version of the K6 will likely rise to 350 MHz.

In the second half of the year, the company will release a K6+3D chip that will run at 400 MHz and higher and contain 256K L2 cache memory on the chip. The chip will also support an optional bus for L3 memory cache.

At the fall Comdex show in November 1998, AMD will preview the K7, a new chip generation that will emulate the "Slot 1" architecture of the Pentium II. But the K7 will have a completely different data "bus" architecture than the Pentium II's Slot 1: the "Alpha" or EV6 bus from Digital Equipment.

The K7 chip will run at more than 500 MHz, according to the company.

Although Intel has already released a "Slot 2" configuration, it is now indicating that the company will continue to use Slot 1 designs for desktops. Bob Cowell, an Intel fellow, said, "Slot 1 and Slot 2 are not successors. They are complementary. They represent the bifurcation of the market. They address different market segments." Slot 2, he added, is for high-end workstations and servers.

In the meantime, AMD will have to continue to engage in price competition. By next year, the 233-MHz K6, the highest level of the chip made, will be in machines costing from $1,000 to $1,200.

Intel is an investor in CNET: The Computer Network.