Intel Gives Details of Next-Generation Chip

SAN FRANCISCO – Hoping to leap ahead of smaller rival Advanced Micro Devices Inc. (AMD), Intel Corp. (INTC) unveiled details of a next-generation computer chip design that it claims will perform better — and consume less power — than its current offerings.

The technology, dubbed the "Core" microarchitecture, will start shipping in the second half of 2006 in chips for notebook, desktop, entertainment and server computers.

"We're going to ramp it like crazy and deliver it in volume," Pat Gelsinger, senior vice president of Intel's Digital Enterprise Group, said Tuesday. "As a result, it's a better product, and people buy better products."

Intel's troubles have mounted over the past year as the Santa Clara-based company has shuffled product plans, managed inventory build ups and supply shortages, and competed against AMD products that many observers say deliver performance that's superior to Intel chips.

Between the fourth quarter of 2005 and the same period of 2004, Intel lost 5.3 percentage points of market share to AMD, according to Mercury Research. It remains — by far — the largest microprocessor maker with 76.9 percent of the worldwide market at the end of 2005.

On Friday, Intel lowered its revenue forecast for the current quarter after seeing weaker-than-expected demand and a "slight" share loss to rivals.

During the semi-annual Intel Developer Forum, Gelsinger demonstrated a desktop chip based on the new microarchitecture. The processor, code-named Conroe, delivers 40 percent better performance while consuming 40 percent less power than today's Pentium, he said. It will be available in the third quarter.

"That's enough that you have a chance of beating the competition," said David Wu, an analyst with Global Crown Capital, said. "If it had been a 20 percent improvement, you don't have enough to write home about."

Intel also gave details about a new chip for computer servers based on the new design. Dubbed Woodcrest, it will boost performance by 80 percent while consuming 35 percent less power, compared with a 2.8 gigahertz Xeon processor. It will be available in the third quarter.

Intel, which in years past focused on building faster processors, has increasingly invested in chips that consume less power. That's because today's faster chips generally use more watts than in years past, creating servers and desktops that are expensive to keep cool and laptops that burn through battery reserves.

The Core microarchitecture builds on the design of Intel's Pentium M processor for laptop computers, which debuted 2003. Intel generally overhauls its chip design every five or six years, said Nathan Brookwood, an analyst with the research firm Insight 64.

Whereas a new architecture is usually applied to desktop processors first and gradually migrates to servers and laptops, Core is the first time a new design has started with the notebook chip and moved to desktops and servers, he said.

Brookwood said the benefits of Core may not be enough to prevent AMD, which has resurged in recent years, from sustaining its current momentum.

"What I'm hearing today is that AMD's performance advantage is going to narrow in the next six months or AMD may even lose its performance advantage," Brookwood said. "That doesn't necessarily mean they're going to lose market share."

AMD Vice President of Marketing, Ben Williams, also played down the advantages of the new design, which he said are being measured against existing Intel products that have been underperforming AMD chips.

"While they're talking and touting great results, they're talking and touting great results against their own products," he said. "Yes, they may be starting to catch up but they have a long way to go."

Intel also discussed plans to manufacture a product that contains four computing engines on a single chip starting next year. The company said it expected 70 percent of all chips shipped this year to contain two cores.

Investors appeared to shrug off the announcements. Shares of Intel closed at $20.06, down 24 cents, in Tuesday trading on the Nasdaq Stock Market. AMD shares lost $1.12, to $38.27, on the New York Stock Exchange.