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A massive supercomputer to be built by Sandia National Laborites and Cray Inc. will use soon-to-be-available next-generation microprocessors from Advanced Micro Devices Inc., a source close to the situation said Monday.
Shares of AMD (AMD: up $0.83 to $5.23, Research, Estimates) were up more than 20 percent on the New York Stock Exchange in afternoon trade.
The decision by Sandia and Cray (CRAY: Research, Estimates) to use AMD's Opteron processors, which will be available next year, is a victory for AMD. Intel Corp. (INTC: up $0.82 to $15.28, Research, Estimates), AMD's perennial rival, has its own next-generation chip designed for servers and supercomputers, named Itanium, which it has developed with Hewlett-Packard Co.
"These are very nice bragging rights, but from a business perspective it doesn't mean all that much because there just aren't that many supercomputers built each year," said Dan Scovel, an analyst at Needham & Co.
The supercomputer, to be called Red Storm by Sandia, will cost about $90 million, the source said. Additionally, the supercomputer will use proprietary technology developed by Cray, which is a move away from how supercomputers have been designed and built in recent years.
AMD declined to comment.
For the most part, U.S. supercomputers have been built using standard components in commercially available computers. Sandia, which does research for the U.S. Department of Energy in Albuquerque, N.M., is aiming to hit 100 trillion operations a second with Red Storm, the source said. AMD's success in placing its Opteron chips in Red Storm was first reported Monday by the Wall Street Journal. The source said an announcement on Red Storm was due later Monday.
Opteron is AMD's brand name for the server-computer version of its next-generation line or microprocessor chips, code-named Hammer. The entire line of chips -- for servers, desktop personal computers and laptops -- is seen by analysts as one of AMD's best chances at returning to competitive parity with Intel, its far-larger rival.
However, Sunnyvale, Calif.-based AMD has had to delay at least one of its Hammer chips. The introduction of Clawhammer, the code-name for the desktop PC version, has been pushed out to the first half of 2003 from the fourth quarter this year.
Last week, AMD reported a quarterly loss that more than doubled from a year ago, citing a weak personal computer market and a build-up of its processors among PC makers and distributors. Analysts said AMD also suffered from stiff price competition from Intel.
As with Itanium, Hammer crunches 64 bits of data at a time, compared with the 32-bit chunks now processed at one time by Intel's Pentium and Xeon chips, and AMD's Athlon and Duron processors.
Itanium, which Intel developed over eight years with printer- and computer-maker Hewlett-Packard (HPQ: up $0.78 to $13.87, Research, Estimates), was built from the ground up to process data in 64bit chunks, while AMD made 64bit modifications with its Hammer chips to its existing 32bit processor technology.
"We feel very comfortable with our competitive position," Intel spokesman Robert Manetta said. Pacific Northwest National Labs and Cornell Theory Center, among others, now use Itanium processors in their computer systems.
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