AMD to raise capital spending 20% to $850 million in 2002

Advanced Micro Devices Inc. today told financial analysts that it will increase capital spending this year by 20% to $850 million. By contrast, archrival Intel Corp. Tuesday said it was cutting its 2002 capex 24% to $5.5 billion.

Some analysts pointed out that despite the Intel cutback in capex, its actual spending total is still nearly seven times higher than AMD. Also Intel's 2001 capex of $7.3 billion included some level of brick and mortar spending, while this year's capital spending, although lower, may still include nearly the same level on fab equipment.

Bob Rivet, AMD chief financial officer, said AMD R&D spending this year will increase 7.5% to $700 million from the 2001 level.

The capex and R&D investments are expected to allow AMD to start initial revenue shipments of its next generation 64-bit Hammer processor series by the end of this year. Jerry Sanders, AMD chairman, said when Hammer becomes widespread in the market in 2003, "we will break away from Intel with massive performance increases."

He expected this year AMD would keep pace with Intel's clock speed increases "and the absolute frequency difference won't widen, although our (top-of-the-line) Athlon processors will still have the (equivalent) performance level as Intel's (top-of-the-line) Pentium 4."

First silicon on the silicon-on-insulator (SOI) 0.13-micron technology Hammer chip is "expected imminently," he said. The firm has also been running some SRAM and small logic chips on the SOI process already to gain experience, he added.

Sanders said AMD's investments have also allowed the firm to run its fabs "with yields in the high 90s" percentage range.

AMD is also developing a Hammer chip set that will be available with the processor introduction, "and we are working with our (chip set) partners" to have third party chip sets on the market as well, Sanders added.