AMD comes of age

Consider these statistics: Advanced Micro Devices (AMD)

reported a profit of over $ 207 million in the second quarter of this fiscal, up

from a $ 172 million operating loss a year ago. Sales nearly doubled to $ 1.17

billion from $ 595.1 million.

The company surpassed $ 1 billion in quarterly revenue

for the first time in its history. The company shipped a record six million ICs,

including 1.8 million Athlon and Duron chips. AMD's results beat Wall Street

forecasts and its stock has soared to more than $ 90.

No doubt, these are impressive figures, but are by no

means stupendous. It has a long way to go before it can pose any kind of threat

to Intel which still controls more than three-fourths of the microprocessor

market.

But certainly, AMD has been on a roll, since it was able

to capitalize on Intel's inability to bring higher performance processors to the

market at the same rate as it was able to do. In addition, AMD, helped by the

copper processing technology from Motorola, has been able to upgrade its product

line.

Also, what should worry Intel is the fact that AMD now

has products that rival even the fastest that Intel produces. As a result, AMD

no longer has to beat Intel's prices by 25 percent to be successful.

Interestingly, AMD's processors have taken over as much

as 25 percent of the market amongst the Taiwan's computer exporters. Now this is

very significant because Taiwan firms manufacture more than half of the world's

computer products on a subcontract basis for the entire world's leading vendors

such as Compaq, Dell and IBM.

So, after two decades of struggle against Intel, AMD has

not only survived, but has ended up beating Intel at its own game as most of the

1 GHz PCs being sold worldwide today have an Athlon chip at their core.

But for all the incredible success AMD currently has and

is most likely to have for at least another year, the company must realize that

all good times will come to a crashing end as they always do. The microprocessor

business is highly cyclic in nature. Currently, this business is going through

an excellent phase, which is likely to end not far from now. This means that AMD

needs to make it doubly sure that it gains as much market share it can from the

current boom part of the cycle. And, that would mean capitalizing on the success

of Athlon and ensuring that Duron--the newly launched range of low-cost

chips--replicates the same success.