Server makers move quickly to get AMD's quad-core chip in new systems

Its Barcelona processor was delayed for six months

Server makers have been moving to add Advanced Micro Devices Inc.'s quad-core chip to their product lines, despite what amounts to a six-month delay by AMD in getting the processor out the door.

Indeed, if AMD hadn't been hit with problems in the new chip, code-named Barcelona, it would seem as if nothing had changed for the company; server makers have been making product announcements based on the new chip despite the delay. AMD said this month that Barcelona is now ready to ship in volume, and the announcement has been quickly met with commitments from vendors to release new systems using the chip.

On Tuesday, Dell Inc. said it is adding five Opteron-based quad-core chips to its PowerEdge line, including blade servers. Hewlett-Packard Co. had previously announced systems with this chip.

And, according to John Fruehe, manager of worldwide market development for AMD's server/workstation products, other vendor announcements are expected.

But the past six months have been rough on AMD since a bug in the L3 cache used by Barcelona turned up last year. As a result, AMD's value has taken a hit on Wall Street, the company has announced layoffs, and most recently, it lost Phil Hester, its senior vice president and chief technology officer.

AMD will report its quarterly earnings after the close of markets on Thursday, although its stock price was up more than 5% by the late afternoon Wednesday to about $6 -- less than half of what it was when it announced the quad-core last September. AMD's price may be getting help from Intel Corp., which said its first-quarter revenue increased by more than 9% to $9.7 billion.

Regarding the overall economic climate in the U.S., Intel President and CEO Paul Otellini told analysts on a conference call this week that 75% of Intel's revenue is not in the U.S. "So we don't see this really impacting our business at this time and haven't seen it so far in the last couple of quarters," according to a transcript on the conference call on Seeking Alpha.

"I think AMD had six very rough months," said Charles King, an analyst at Pund-IT Inc. in Hayward, Calif. But "once a processor gets into a data center or business client, it takes a really massive screw-up for a customer to abandon a client," he said. The Barcelona delay, King added, has not been "horrendously difficult to deal with."

Among the Dell platforms with the AMD chip are PowerEdge SC1435 and 2970 rack servers and the M605 blade server -- all are two-socket systems. Dell claimed that those servers can produce 79% more performance compared with those based on dual-core processors.

Copyright © 2008 IDG Communications, Inc.

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