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Friday, September 22, 2006

Shorts Chase AMD (INTC)(AMD)

The rise in the short position in AMD was the second largest for any stock listed on the NYSE. Shares short rose 10.8 million to 37.3 million. It is not only the size but the percent gain that is significant.

AMD has been flogging that fact that its worldwide share of the chip market could eventually hit 40%. It is now just above 20%. The company has also introduce a socket that will allow OEMs that develop their own silicon to interact easily with x86 chips. Several companies like IBM and Dell have joined the initiative. AMD has also picked up new customers like Dell and IBM that use AMD chips in their servers and PCs. All of this is thought to come at the expense of Intel.

AMD chips were viewed at more powerful and cost-efficient for about a year, but Intel has introduced it new core dual technology which many customers now view as the superior chip. Intel has also recently announced that it has been able to develop laser technology which allows chips to transfer data between one another. This process could change the way that both servers and PCs are configured for more streamlined operations.

The shorts may not be the only ones who do not buy AMD's new act. Over the last six months, rival Intel has watched its stock remain flat while AMD's has dropped 20%.

In the war of words, market share projections, and R&D, Intel seems to be winning the battle right now.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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