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Last updated: Friday, November 14, 2008

A year ago, Advanced Micro Devices Inc. worsened its financial problems by botching the launch of a powerful new server chip. The flubbed introduction gave bigger rival Intel Corp. eight months to steal market share. Now, Sunnyvale-based AMD is rolling out the successor to that chip months ahead of schedule in a bid to regain lost ground. AMD has about 20 percent of the global market for microprocessors, the brains of personal computers and servers, while Intel has the other 80 percent.

AMD’s new Opteron processors are AMD’s first chips based on 45-nanometer manufacturing technology. That means the company has shrunken the tiny parts of the circuits to an average of 45 nanometers wide, or 45 billionths of a meter. Smaller circuitry means the chips are cheaper to make and can hold more transistors, which boosts performance. AMD developed its manufacturing process in a partnership with IBM Corp. AMD still lags Intel in that department, however.

Intel has been selling its 45-nanometer chips for a year, an advantage that allowed Intel to maintain healthy profits despite pressure on the chips’ selling prices and economic gloom. The economic downturn has now hurt Intel badly, though. Intel chopped more than $1 billion from its fourth-quarter sales forecast Wednesday and lowered its profit guidance because slowing demand for PCs has hurt demand for its chips. AMD also touts design tweaks in its new chips that the company says translate to 20 percent faster performance and 35 percent less power consumption when idle compared to the previous generation.

The new technology is especially important for AMD because the company is trying to climb back to profitability after losing $5.6 billion over the past eight quarters. It is also looking for ways to cut costs and is spinning off its factories in a joint venture with an investment arm of the…

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Advanced Micro Devices Rolls Out New Server Chips

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