Analysts: Shanghai puts AMD back in the fight with Intel

Early release of AMD's first 45nm chip will help it battle Intel's new Nehalem, due next week

With last week's early release of its first 45-nanometer chip, Advanced Micro Devices has taken a big step toward putting its troubles behind it and giving Intel something to worry about.

On Thursday, AMD released its next-generation Opteron quad-core chip, code-named Shanghai. AMD's quad-core debut in 45nm manufacturing is about a year behind Intel's move from 65nm to 45nm technology, but the switchover brings the company up to speed with a rival that has been outpacing it on both technology and marketing fronts.

"This shows that they are back on track and have regained their footing," said Jim McGregor, an analyst at In-Stat. "This is critical for AMD. They're rebuilding credibility. ... This makes them more competitive at a critical time -- right before Intel comes out with Nehalem."

AMD is hoping the new Opteron chips can help it rebound from the struggles that bogged it down after delaying the release of its Barcelona chip. The eight-month delay, caused by a glitch in the processor, lost the company market share, as well as mind-share, prior to Barcelona's ultimate release last spring.

The chip maker's troubles didn't end there.

AMD went through a series of executive shake-ups this summer, culminating in Dirk Meyer replacing Hector Ruiz as CEO, just as the company was reporting its seventh consecutive quarterly loss. And then last month, AMD announced that it is splitting off its manufacturing operations into a separate company to cut costs and get an infusion of capital. The new business, which is being temporarily called The Foundry Company, will assume about US$1.2 billion of AMD's debt.

Intel has scheduled the launch of its first Nehalem chip for November 17, which also will be the day several PC makers begin shipping desktop computers running the new processor. Officially named Core i7, the Intel chip is a quad-core designed for high-end desktops for power users and gamers. Intel has been shipping previews of the chips to hardware vendors since September.

And while Intel continues to push out new products, AMD is putting itself back on track with its early release of Shanghai, which had originally been scheduled for release in the first quarter of next year.

"AMD was very smart in not only delivering Shanghai around two months early, but they also delayed the big announcement until they had units in hand and [were] shipping," said Dan Olds, principal analyst at the Gabriel Consulting Group. "I'm always saying that AMD has to execute, and they did it with this product. I believe this gets them back into the game with Intel. This chip should be competitive from both a pricing and performance standpoint and puts AMD at parity with Intel, at least for the short term."

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