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AMD, IBM sign chip pact
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February 27, 1998: 7:58 p.m. ET
Computer giant and processor maker agree on plan to co-produce K6
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NEW YORK (CNNfn) - Making good on rumors that caused its shares to leap 10 percent Thursday, chip maker Advanced Micro Devices Inc. signed a deal Friday with IBM Corp. to increase production of its K6 microprocessor.
AMD said the agreement "will somewhat augment" its production capacity once production begins in the third quarter.
The companies wouldn't disclose any financial terms or production quotas.
The deal is important for AMD, which has struggled to increase supply amid strong demand for the K6, a low-priced competitor to high-end versions of Intel Corp.'s Pentium processor.
Several major personal computer companies, including IBM and Compaq Computer Corp. (CPQ) have used the chip to trim costs on their lowest-priced models.
But AMD has been unable to fully capitalize on the growing popularity of the chip, in part because it is in the midst of a major transition to 0.25 micron production of the processor.
In early February, AMD confirmed it had canceled plans to appear at a series of conferences hosted by Wall Street firms and planned to avoid such forums until the company could meaningfully respond to questions related to the transition.
AMD (AMD) shares closed down 1-5/8 to 23-1/2.
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