Advanced Micro Devices Inc still can’t meet demand for its Pentium Pro-compatible K6 microprocessors which are now used by five of the top ten PC manufacturers, including Compaq, IBM, Acer, Fujitsu/ICL and AST. In its fourth quarter just ended AMD announced a loss of $12.33m down from $21.24m last time, on revenue that rose 23.4% to $613.17m from $496.86m, although the loss was less than analysts had forecast. For the year AMD lost $21.09m down from a loss of $68.95m in 1996 on revenue that rose 21% to $2.35bn from $1.95bn. AMD shipped 1.5m K6 parts in the fourth quarter – 50% more than in the third quarter and half of them the high-performing 233MHz devices – but crucially it still needs to get more dies per wafer. Revenue from K6 sales increased 26% to $190m over the third quarter but as AMD’s non- microprocessor business – communications, memory and logic – was profitable, the entire loss is down to the microprocessor group. The situation is likely to get better and not worse in the next two quarters as the company fires up its 0.25 micron process at the Austin, Texas-based Fab 25 plant and crosses over to using 0.25 wafer technology. As the market for sub-$1,000 PCs gets stronger so customers are likely to want more of the bigger, cheaper K6 parts. AMD managed to get 10,000 0.25 micron K6 parts developed at its Sunnyvale, California-based submicron development center away in the quarter; IBM uses the 266MHz device in desktops, Compaq uses a 233MHz mobile version in notebooks. Volume are not expected before March. The K6 3D Chomper chip with MMX instructions will be also produced in this process and is due in the second quarter. AMD’s also pumping money into building its Dresden plant that’ll turn out Pentium II Slot-1 compatible K7 chips will be demonstrated at Microprocessor Forum in November and ship in 1999. AMD says its absolute goal is to get the fastest chips into the hands of its strategic partners such as IBM and Compaq, not short-term profit or volumes. It says it doesn’t know when it’ll record a profitable quarter but says it’s goal is still to capture 30% of the market for chips that run Windows-based computers and to offer them 25% cheaper than Intel at the same performance mark.

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