Intel and AMD

Intel is the big company with lots of money to spend on R&D, but for years AMD made some good decisions and Intel made some mistakes.

• AMD created chips that got more work done with a lower clock speed. Intel designed the Pentium 4 to work at very high clock speeds, then discovered that it was impossible to actually achieve those speeds. While AMD coasted along, Intel borrowed some technology from its laptop designs and created the Core 2 family that was even more efficient.  
• AMD introduced the 64 bit extensions used when server or Vista computers have more than 4G of memory. Originally Intel believed that 64 bit would be only used on servers and they desgined a new, more efficient, but incompatible family of processors called Itanium. Eventually Intel added a version of the AMD instructions to its mainstream CPUs.
• AMD CPU chips contain an internal memory controller. Memory connects directly to the CPU chip instead of a controller chip on the mainboard. Initially this was just faster and more efficient, but it proved a much better design as CPU chips added multiple internal cores. Intel finally admitted this was much better, and has just introduced the Nehalem family of chips and corresponding mainboards based on a version of the same design AMD had for years.

AMD has not been able to follow up on its successes, while Intel has corrected its mistakes. At some point, the size of the company has an effect. Intel transitioned from 65 nm technology to 45 nm technology a year ahead of AMD, and Intel uses new materials in chip manufacturing that AMD won't match for years. AMD is a smaller company and can only afford one basic design. Intel has been able to experiment with several different system designs, and when the mainstream product gets in trouble they can borrow technology from another product line.

While the most powerful CPU chips get a lot of attention in the press, the vast majority of computers come with slower mainstream processors. In this category, leading edge technology doesn't matter and both companies make perfectly adequate processors. Advantage comes from unexpected places. Mainboards for mainstream AMD systems have had much better integrated video than Intel boards, and while a new Intel CPU may use a few less watts it is not uncommon for that advantage to be lost when the rest of the mainboard is added in.

AMD makes fine CPU chips. However, in order to price them competitively, AMD has been losing money each quarter. It is not clear how long this can keep up. While it is a safe bet to buy AMD systems, it is not necessarily a good idea to buy AMD stock.