June 9, 2004 4:02 PM PDT

AMD lands deal with China's Lenovo

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China's largest PC manufacturer has started to use microprocessors from Advanced Micro Devices for the first time, a major boost for AMD in the growing Chinese market.

Lenovo, formerly known as the Legend Group, introduced two new home PCs that run Athlon XP and Athlon 64 processors from AMD, the companies announced.

Lenovo controls around 25 percent of the PC market in China and has been a fairly staunch ally of Intel's. The company sells Itanium servers built by Intel and is often one of the first PC makers to try out new reference designs or products from the Santa Clara, Calif.-based giant.

Intel is still the dominant company in China. Worldwide, Intel controls about 84 percent of the market for PC processors, compared with AMD's 14 percent, and it has an even larger share in China, where it has been operating since the 1980s. Lenovo also sells far more Intel-based models.

The alliance means that Dell remains one of the few, if not the last, major PC makers worldwide not using AMD chips. Since its merger with Emachines, Gateway has once again started incorporating AMD chips.

AMD has been trying to expand into the Chinese market for the past three years. It has moved its regional headquarters from Hong Kong to Beijing and expanded its testing facilities. It also has signed contracts with Chinese government agencies to bring inexpensive PCs to schools. The company has worked with Chinese company Dawning Information Industry to build a supercomputer, which is now one of the most powerful machines in the world.

Although disposable income per capita in China is relatively low compared with Western countries, it is one of the prime nations for PC makers. Shipment growth remains high, and Chinese customers tend to buy feature-rich PCs, according to executives and analysts. In part, the upscale buying is due to the growing popularity of broadband and online gaming.

 

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