The price that Advanced Micro Devices Inc can charge for its K7 processor, due out at the end of this month, will be constrained by the additional premium that OEM purchasers will have for the chip infrastructure that supports the CPU. The K7, which will come in 500MHZ, 550MHZ and 600MHz variants, will initially connect to a PC motherboard via AMD’s own Slot A interface. According to Linley Gwennap, at The Microprocessor Report, AMD has signed up a couple of major motherboard manufacturers to produce the Slot A motherboards. However, because these are being produced solely to support the AMD chip, the manufacturers will have to charge OEM customers more for the components. AMD’s going to have to charge less for the processor to offset the additional costs for chip infrastructure, Gwennap said.
This means that AMD will have to use the K7 in the performance PC sector, competing against Intel Corp’s strongest brand, the Pentium III, while maintaining a price at least 25% lower than its rival and soak up the infrastructure costs. Gwennap expects that, AMD will move the K7 from the initial Slot A to a socket version – Socket A – sometime in early 2000. This will reduce cost. The socket version will allow AMD to introduce K7 into the value PC segment, displacing the K6-2. However, AMD has refused to confirm speculation about a socket version of the K7. And the firm could still face extra infrastructure costs if it decides to use a proprietary connection method.