AMD chips may soon power Dell PCs

AMD to power Dell?

The perennial rumour that Dell will start using AMD processors is getting louder, and some industry watchers say there is reason to believe that this time it could prove true. A switch away from the long-standing Intel-only policy could result in lower prices from the PC giant.

A report in Taiwan’s Economic Daily News cited sources suggesting Dell had agreed deals with four contract manufacturers to develop AMD-based motherboards, servers and notebook PCs. AMD declined to make a statement and Dell said it “cannot comment on speculation or unsubstantiated rumours that appear in the press”.

However, a welter of circumstantial evidence suggests that this time Dell might change its stance on chips. The firm has been under pressure recently, particularly in the consumer sector where AMD has its strongest suit, and Dell has seen its profits fall after downgrading forecasts.

Meanwhile, Dell’s biggest rival HP is showing signs of growth in PCs and commodity servers and, like all other large PC makers, has systems based on AMD as well as Intel. As a further indication, Dell recently began selling packaged AMD chips from its web site, and AMD has just opened a new Dresden chip fabrication plant, giving it significantly greater volume production capabilities.

In a recent report, Analyst Benjamin Reitzes of UBS Investment Bank wrote, “Dell will continue to face difficulties in its consumer business given its competitors use AMD processors and some even seem to be less concerned with profitability.”

If Dell does issue hardware with AMD chips it could be good news for IT buyers. AMD’s Opteron processor has impressed benchmarking experts; and if competition intensifies between Intel and AMD it could drive down system prices yet further.

However, Intel is likely to receive a boost in January when UBS’s Reitzes suggests Apple will release its Mac Mini with Intel chips.