AMD faces problems

For the past two years Advanced Micro Devices has made Intel, one of the world's most prominent companies, look bad. Better products and better timing have brought AMD significant market share and prominent new customers like Dell. But Intel is on the comeback with new processor designs better suited for the power-efficient multicore era, and it will beat AMD to the quad-core punch by using a design strategy that makes purists scoff but accountants happy. The next six months will be tricky for AMD CEO Hector Ruiz. AMD is taking a hit in the stock market after disclosing that its gross margin fell five points from the second quarter to the third, which ended last week. Part of that was due to the price war in the PC processor market, but AMD also is facing a challenge of overall demand is rising before new manufacturing technologies are completely ready. AMD's current pickle is the result of its success, which makes it a little easier to swallow for company executives. Demand is high, but the company's dual-core processors still use its 90-nanometer manufacturing technology. Intel's chips, on the other hand, are built using the smaller transistors provided by its 65-nanometer manufacturing technology. Not only is AMD using larger transistors, but its dual-core Opteron and Athlon 64 processors contain two processing cores integrated onto a single piece of silicon, or a die. This design has given AMD great performance during the past few years, but resulted in processors that were almost twice the size of its single-core chips. AMD's 90-nanometer dual-core Opteron and Athlon 64 processors have a die size of 199 millimeters squared. By chip design standards, that's considered a little large, McCarron said. When AMD starts making dual-core Opterons on its 65-nanometer manufacturing technology, that die size is expected to go down to something a little more comfortable that will allow AMD to produce more chips per wafer. An AMD representative declined to comment on the die size for its first 65-nanometer products.