IBM drops AMD processors from its desktop PCs

<br>NEW YORK (AP) _ In a cost-cutting move, IBM Corp. has stopped selling desktop PCs in the United States with Advanced Micro Devices Inc.'s microprocessors and may also drop AMD processors from its

Wednesday, August 15th 2001, 12:00 am

By: News On 6

NEW YORK (AP) _ In a cost-cutting move, IBM Corp. has stopped selling desktop PCs in the United States with Advanced Micro Devices Inc.'s microprocessors and may also drop AMD processors from its computers sold in Asia.

IBM's U.S. desktops will now carry only Intel Corp.'s processors, said Ray Gorman, spokesman for IBM's PC division.

By dropping one chip platform, IBM hopes to cut some of its manufacturing expenses, Gorman said.

``With the low margins on PCs, it doesn't make sense for us to invest in two sets of chip platforms,'' Gorman said.

AMD processors are still available in IBM Aptiva PCs manufactured in Japan, but when supplies of those are depleted, the company will consider whether to continue to offer them, Gorman said. The move would cost no IBM jobs, he said.

In the U.S. market, AMD processors were available in IBM's NetVista A20i model, which sold out in mid-2001, Gorman said. Most PC buyers prefer machines equipped with Intel chips, Gorman said.

IBM's beleaguered PC division has lost $1.8 billion since 1996, including $66 million in the first half of 2001.

The discontinued NetVista machines were assembled at plants in Guadalajara, Mexico and in Taiwan, Gorman said. The Aptiva PCs are manufactured in Japan, Gorman said.

``Sometime before the end of the year we'll run out of those,'' he said.

Shares of Sunnyvale, Calif.-based AMD fell $1.11, nearly 7 percent, to close at $15.50 on Tuesday on the New York Stock Exchange, where IBM shares rose 34 cents to $106.20.

AMD has gained market share from Intel in recent years, but its bottom line has suffered because of the PC slump and a brutal price war with its Silicon Valley rival.

AMD spokesman Drew Prairie said the IBM announcement was not surprising because IBM is focusing on selling PCs to businesses, while AMD chips have done better in the consumer retail market. Prairie also said, however, that AMD would keep trying to win placement in IBM products.