AMD to Roll Out Its Clone of Intel 386 Chip Next Week
One of the most lucrative monopolies in American industry will finally be broken Monday when Advanced Micro Devices formally rolls out its long-awaited clone of Intel’s 386 microprocessor, a computer-on-a-chip that forms the brain inside many popular personal computers.
But the AMD 386, which remains the focus of a bitter legal battle between AMD and Intel, is expected to capture only a small fraction of the PC microprocessor market. Major personal computer vendors are reluctant to risk alienating Intel by buying the AMD chip, and Intel will soon fight back with cheaper and faster versions of its more advanced 486 microprocessor.
Still, the new 386 will be a boon for loss-plagued AMD even if the chip does little damage to Intel, analysts say.
“This is great news for AMD,” said Dean McCarron, an analyst with the chip research firm In-Stat in Phoenix. He said the 386 market is worth about $700 million a year and called AMD’s goal of a 10% share “realistic.”
Mel Phelps, semiconductor analyst with Hambrecht & Quist, said AMD could expect to bring in about $50 million from 386s this year and in the best case scenario could sell $100 million worth this year and as much as $200 million to $300 million worth next year. The 386 is the most popular member of the family of Intel-designed microprocessors that defines a personal computer as International Business Machines-compatible.
AMD, which pegs the 386 market at $1 billion a year and growing, said its 386 is about 20% faster than Intel’s chip and sells for the same price. The company also introduced a version of the chip designed for portable PCs that uses less power than the Intel product.
The Intel 386 has often been in short supply since it was introduced five years ago, and AMD is counting on orders from smaller PC companies that have not been able to get as many chips as they want from Intel.
Leading PC vendors such as IBM, Compaq Computer and AST Research are expected to bypass the AMD product, however. They are concerned about possible compatibility problems, outstanding legal issues and--perhaps most important--preservation of a priority relationship with Intel.
AMD says the chip has been exhaustively tested by more than 20 PC vendors and an independent lab to ensure complete compatibility, but even a small glitch--such as the inability to run a single software program--could spell trouble.
In addition, Intel has sued AMD for copyright infringement over the use of Intel microcode, the tiny instructions written into a microprocessor.
AMD claims the right to use the microcode under a 1976 agreement, and the issue is scheduled to go to trial this summer. A verdict against AMD would require re-engineering of its 386.
And companies that opt for the AMD 386 could find themselves at the back of the queue for future Intel products.
“The customer has to make these trade-offs in his mind--if I go with AMD, will I get the initial allocation of the (new) 486?” Phelps said.
Intel is expected to introduce a low-end version of the 486 next month that will sell for less than half the $700 it charges for a full-blown 486. Such a product would be competitive with the AMD 386 because it incorporates functions that require additional chips in a PC equipped with a 386.
AMD is expected to find its market among second- and third-tier PC companies in the United States and Asia that have been unable to get full allocations from Intel in the past and are willing to take some risk for better price and performance.
Northgate, Bell Computer, Orchid and Cybertek are among the companies that have decided to use the AMD product, according to an AMD spokesman.
BOOMING SALES OF THE 386
Sales, in millions of units, of Intel’s 386 microprocessor and its lower-priced 386SX derivative, which went on the market in 1988.
386, 1987: 0.71
386, 1988: 2.51
386SX, 1988: 0.46
386, 1989: 2.80
386SX 1989: 2.12
386, 1990: 3.39
386SX, 1990: 3.98
