The 0.13-micron SOI technology was jointly developed with Motorola Inc. under an ongoing R&D alliance, which is also focused on other next-generation processes such as copper interconnects and low-k dielectrics. AMD has also licensed SOI design libraries from IBM Corp. These technologies are expected to play a role in migrating all of AMD's PC processors to silicon-on-insulator processes during the next couple of years, said Hector De J. Ruiz, president and chief operating officer.

When asked which SOI technology will be used by AMD to first produce processors in the Dresden Fab 30 plant, Ruiz indicated that it would be difficult to answer that question because the production processes were from the Motorola R&D partnership while designs are using libraries licensed from IBM six months ago.

"We kind of have a combination of capability on the design side, coming from IBM, and some help on the technology side--the manufacturing piece--coming from the alliance between Motorola and AMD," he said while fielding questions from analysts during the conference call on Thursday afternoon following the company's release of Q2 financial results (see July 12 story). "That is what is being implemented in Dresden, and we are currently running pilot production from that technology," he said, adding that AMD will start volume production of Athlon 4 processors using 0.13-micron SOI processes by the end of 2001.

The ramp of SOI production in AMD's Fab 30 is the start of a major shift to silicon-on-insulator. In the near future, "100% of our production will go to SOI," promised W.J. (Jerry) Sanders III, chairman and chief executive officer of AMD. "We are going to 30% market share in PC processors, and we are going to get there by offering superior value," he told one analyst, who was stunned at AMD's plans to shift its entire PC processor lineup to silicon-on-insulator technologies.

"This is why we are spending money in Fab 30, and why we built Fab 30," said the CEO. "We will be 100% capacity in Fab 30 by the end of this year and we are ramping to 100% SOI capacity as soon as we can in 2002 and 2003."

AMD--unlike its PC processor rival, Intel Corp.--believes SOI technology is absolutely required to push higher performance and lower power consumption in next-generation 0.13-micron processors--especially for portable PCs. A couple months ago, AMD said it was delaying the introduction processors in its "Hammer" series to align the CPU family with its SOI process roadmap (see May 1 story). SOI technology adds a layer of oxide between silicon layers, which reduces lost energy when transistors are operating at higher frequencies. The silicon-on-insulator sandwich promises 20-to-30% performance gains over standard CMOS silicon wafers, according to SOI proponents.

AMD has said that $2.3 billion will be invested at it Dresden manufacturing site by 2003. The fab began production in June 2000, and it now employs more than 1,500 people.

The Dresden fab facility and SOI will play a key role in AMD's target to capture 30% of the PC processor shipments in the near future. During Thursday's conference call with analysts, Sanders said market researchers have estimated that AMD had more than 22% market share in PC processors in Q2. He said it his company shipped a record 7.7 million PC processors in the just-ended quarter, a 5% increase from 7.3 million in in Q1. Sanders believes it might be possible to sequentially increase processor unit shipments 5% again in the third quarter, but he only would commit to "another record" level in Q3.

AMD is gunning to claim 50% market share in mobile PC processors shipped in U.S. portable systems that are sold through retail channels by the end of 2001.

"We are selling out the production of the Dresden fab," Sanders told analysts on Thursday. "We are ramping at the maximum rate," he said, adding that AMD is now negotiating with PC makers for deliveries of optimized central processing units.

AMD's emphasis on gaining market share from Intel is coming with a price, however. The company's profits were sharply eroded in the second quarter because of MPU price wars with Intel, which surprised AMD by an "unprecedented" number of price cuts in Q2, according to Sanders.

In Q2, average selling prices for PC processors "were down to about $75 and change," estimated Sanders, who added the decline was about $15 below ASPs in the prior quarter. That drop "cost us $115 million in revenues, most of which would have dropped to our bottom line," he said. (On Thursday, AMD posted a 17% sequential drop in sales to $985.3 million and a net income of $17.4 millon in the second quarter.)

The flamboyant CEO promised to not let up on AMD's efforts to take market share from Intel. "We are not going to be pushed out of the ring by a Sumo wrestler," Sanders said, referring to Intel and its huge budget supporting the Pentium 4. "We have a lower cost structure on our products than they have on theirs."

Sanders said at current process technologies--0.18-micron design rules--AMD's Athlon processor is half the size of Pentium 4, and even with the next-generation 0.13-micron design rules "they are still 70% larger," he claimed.