AMD Opts for Two-Front War

"Whether through higher prices from monopoly profits, fewer choices in the marketplace or barriers to innovation -- people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses," said AMD CEO Hector Ruiz.

Ironically, AMD has spent the last few years, under Ruiz' leadership, strengthening its competitive position by making better chips and improving its manufacturing facilities. The company's turnaround from follower to a true competitor has been impressive.

AMD was the first to add on 64-bit capabilities to its 32-bit processors, and its dual-core initiatives forced Intel to follow its path. After entering the server market in 2003, AMD's Opteron chip is a powerful counter to Intel's dominant Xeon processor. AMD also recently introduced its first chip for thin-and-light notebook computers.

Still, AMD's market share remains under 20%, while Intel essentially controls the remainder. AMD has been unable to crack Intel's hold on Dell(DELL), the world's largest computer maker, and Intel hit a home run with its Centrino brand of mobile-networking technologies.

Following its decision to spin off its flash memory unit, AMD will soon be left with just its computer microprocessor unit. The flash business will chop off about 40% of AMD's sales base, leaving it looking even smaller compared with Intel, the world's largest chipmaker.

One would expect AMD's technology to be able to win out if it can consistently, and over a sustained period, produce better products. It has made strong inroads with Sun Microsystems (SUNW) with a new line of innovative blade servers soon to hit the market. AMD also has extensive product lines at IBM and Hewlett-Packard(HPQ).

Getting to this point technologically and manufacturing-wise hasn't been easy for AMD, but now AMD wants to fight Intel on another front. This won't be easy either.

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