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Wednesday, July 12, 2006

Intel is Back in the Game

By William Trent, CFA of Stock Market Beat

We brought you the story months ago of Intel’s planned price cuts and their likely effect on AMD. Bingo on both counts. Now, rumor has it that the Intel chips to be introduced later this week are blazing fast, and will be a marked improvement over not only Intel’s current line-up but AMD’s as well. But don’t take this as a back-up-the-truck on Intel sign. We wouldn’t take a bite at the biggest chip maker unless the overall industry fundamentals got a lot better.

Intel hitting hard in fight against AMD - Jul. 11, 2006

Now, for the first time in a number of quarters, AMD is being forced to respond to moves by Intel, and not the other way around.

“AMD doesn’t have a new lineup coming out until some time in the middle of 2007. We believe the new products will put (Intel) back on equal footing,” said Cody Acree, an analyst with the brokerage Stifel Nicolaus.

The first new chip from Intel, dubbed Woodcrest and introduced last month, is aimed at the market for servers, the computers that power corporate networks.

That’s exactly where AMD took customers from Intel, and analysts and investors say the new chips appear to have closed the technology gap between the two companies.

The combination of price cuts and new products means Intel will likely take back some of the market share it lost to AMD in the last few quarters, according to Sunil Reddy, senior portfolio manager for Fifth Third Asset Management. The funds Reddy manages don’t own AMD or Intel.

The real action will be with Intel’s desktop/laptop chip intros, dubbed Conroe/Merom. That’s where the rumors are showing not just “equal footing” but a jump ahead.

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