AMD Continues Rebound With Strong Q2

The news marks the third consecutive profitable quarter for the semiconductor maker, which hit its nadir in the past three months of 2002 when it reported a loss of $854 million.

"AMD deserves credit for becoming a much more consistent company," says Merrill Lynch semiconductor analyst Joseph Osha in a report released today.

AMD released its numbers a day after Intel disclosed that its second-quarter profits had nearly doubled to $1.8 billion from the comparable period in 2003.

Though AMD plays David to Intel's semiconductor Goliath, it's seeing many of the same market trends.

Most notable is the surge in sales of flash memory, which is a key component in cell phones, digital cameras, PDAs and mp3 players. AMD reported that sales of its Spansion line of flash hit record levels in the second quarter.

While microprocessor sales in the second quarter are traditionally weaker than during back-to-school months and at year-end, AMD reported accelerating sales for its Opteron and Mobile Athlon 64 processors. The two are hybrid devices, which can run both 32- and 64-bit software. Opteron is seeing strong demand in the server space, where 64-bit Linux software is readily available. Athlon sales are still ramping up because Microsoft hasn't yet released a production version of Windows XP, which can support the AMD 64-bit extensions used in the chip.

Moving forward, AMD is staking its continued ability to compete with Intel on its adoption of new technology.

"We plan to lead the way in dual-core processors in mid-2005," AMD chairman Hector Ruiz said yesterday. Earlier this year, AMD beat Intel to the punch in announcing plans for dual-core devices, which cut power consumption as compared with single-CPU chips with similar throughput.

AMD is also looking toward a new fabrication facility it's building in Dresden, Germany, to help it increase the quantity of chips it can produce. The plant is on schedule to begin operation in 2006.

The plant will aid AMD with its transition from 130-nm to 90-nm process technology. AMD began production of 90-nm microprocessors at its other facilities in May, and expects to ship the devices in quantity in the third quarter.