AMD, Dell Dealing On Mobile Chips

Welcome Guest. | Log In| Register | Membership Benefits

May 16, 2001 (12:00 AM EDT)

Advanced Micro Devices has cut a deal with Dell Computer Corp.—the last major PC vendor not using its processors—to use its new mobile chips in laptops, according to a financial analyst.

Eric Ross, who covers AMD (stock: AMD) for Thomas WeiselPartners, San Francisco, said the deal is on track to be announced next month.

Such a deal would be significant for AMD, as Dell (stock: DELL) had been the last major PC maker to have an exclusive OEM agreement with chip giant Intel Corp. (stock: INTC).

In fact, barely a week ago, AMD chairman Jerry Sanders told analysts at a Merrill Lynch conference in New York that he still thought it was unlikely that Dell would ever use AMD chips.

But Ross says the two companies now have an agreement.

"I was as surprised as everybody else," Ross said. "I've heard from several of my really good sources that I've corroborated. I'm as certain as an analyst can be about this."

The official announcement would likely come at the Computex trade show next month in Taipei, he said.

Earlier this week, AMD rolled out its Athlon 4 Mobile processor. The Sunnyvale, Calif.-based company priced a 1GHz Athlon 4 at $425 in 1,000-unit batches.

In doing so, the company hopes to put the heat on Intel, which sells a competing 1GHz Pentium III mobile processor at $722 in 1,000-unit batches.

At the time of AMD's announcement earlier this week, it listed only Compaq Computer Corp. (stock: CPQ) as a major vendor that had agreed to ship notebooks with the new processor.

While an AMD executive says more vendors will follow, a spokeswoman today declined comment on the reports of a deal with Dell. Dell executives did not immediately respond to requests for comment.

Ross says an AMD-Dell deal would be significant and keeping with his forecast that AMD—which has the No. 2 PC processor market share—would gain share from Intel in 2001.