Chip analysts put little faith in AMD-Dell rumors

Rumors swirl that Dell may start including AMD chips in its computers, but experts say the buzz is misplaced speculation.

Will we soon see Dell computers with Advanced Micro Devices chips on the market? Hardware analysts, who have been down this road before, are yawning at fresh rumors that Dell will soon ship systems with AMD processors.

In a research note released this week from Piper Jaffray & Co., a financial services firm in Minneapolis, analyst Les Santiago states that Dell Inc. has developed AMD-powered processors and will start shipping them this year. Santiago's analysis is based on conversations with sources in the PC supply chain, press reports and distributor comments.

A Dell spokesperson had no comment about a relationship with AMD, but did say the company continually evaluates new technologies.

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This kind of speculation is not new, according to Martin Reynolds, an analyst with Gartner Inc., a Stamford, Conn., research firm. Reynolds said Dell, which has an exclusive relationship with Intel Corp., occasionally feeds the rumor-mill to remind Intel that its options for new processors are open.

"It could very well be a negotiating ploy," Reynolds said.

Reynolds said that the possibility of Dell migrating from Intel to AMD is unlikely.

"I think it was possible a few years ago," he said. "But the new processors Intel is introducing should serve Dell's needs for price and performance."

Reynolds also said that AMD has had difficulty keeping up with demand for its semiconductors. He said that Dell's manufacturing demands are huge, so taking on a relationship with the computer giant might even prove to be a bad move for AMD.

As the number two chip maker, Dell would be quite a get for AMD, according to analyst Gordon Haff of Illuminata Inc., in Nashua, N.H. However, Haff agreed with Reynold's view that a new relationship between Dell and AMD is doubtful.

"Michael Dell likes to periodically send messages to Intel that Dell does have the option of introducing AMD," Haff said.

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