Industry sources said that AMD will launch its own counterparts to Intel Corp.'s Pentium III and Celeron microprocessors, adding on-chip caches to its successful Athlon microprocessor.

But questions surrounding AMD concern the manufacturing cost of the two processors, the corresponding price, and how the market will view the new chips.

AMD said last month that the Duron or "Spitfire" microprocessor would ship in June, and industry sources said the Thunderbird would also launch next month.

Pinning down a date has proven problematic, however. Given the last-minute maneuvering with the launch of AMD's 1-GHz microprocessor, sources were reluctant to specify the date beyond early June.

The clock speeds of each of the chips have proven easier to establish. Industry sources and resellers, including Lynn Computer, [www.lynn.com] have indicated that speeds of 600 to 700 MHz for the Duron parts are expected. AMD apparently dropped a 550-MHz part that the company had previously planned to ship.

Sources said the 700-MHz and higher parts are expected at the rollout. It was unclear whether AMD would launch at speeds up to 1 GHz or stagger the rollout over the course of the month.

Given AMD's recent history, there is no reason to expect the company will suffer problems ramping the chips as it did two years ago. Instead, the simple economics of the chip may play a more prominent role.

Currently, AMD's Athlon, a processor that uses discrete off-chip cache, has been successfully positioned as having at least the performance of the Coppermine, a chip from Intel Corp. that integrates the cache directly onto the die. AMD has continued to offer small pricing discounts based on the chip's die size.

But the performance the Athlon core produces could also make the Thunderbird more expensive to manufacture than the Coppermine. The Athlon core is slightly smaller than the Coppermine, at about 102 sq. mm vs. 106 sq. mm within a 0.18-micron process. But while the Coppermine already integrates 256 kilobytes of on-chip cache, that same amount must be added to the Athlon die to form the Thunderbird, increasing the die size and cost, and potentially the price as well.

Adding 256 Kbytes of cache to the Athlon die would boost its cost by about 25%, according to Keith Diefendorff, an analyst with MicroDesign Resources, Sunnyvale, Calif., writing in an August 1999 issue of The Microprocessor Report.

On the other hand, MDR analysts also noted that adding on-chip cache to the Celeron reduced the overall system cost by about $5, or 15%, by cutting packaging and testing costs. The Athlon processor die is shipped with 512 Kbytes of off-chip SRAM, packaged within a module.

Economics aside, AMD's reputation will also play a role. AMD's superior manufacturing yields have helped the company offer chip discounts to entice customers, which may also be necessary during the Thunderbird generation. "Intel is the incumbent vendor," said Nathan Brookwood, analyst with Insight 64, Saratoga, Calif. "AMD always has to come up with some set of value propositions...give them some sort of incentive."

Whether a PC OEM will find incentive enough in the Thunderbird's performance, which will undoubtedly improve compared with the Athlon, remains to be seen.

It is also unknown whether AMD will increase its chip prices to reflect the improved performance, or whether customers will tolerate it. However, analyst Dean McCarron of Mercury Research Inc., Scottsdale, said he believes that "because integrated cache produces better performance...at the high end, they may be able to justify holding prices up."

The battle will likely become more pronounced at the low end of the market, where the Celeron will be pitted against the larger, higher-performance Duron. Since the Duron uses the Athlon's 200-MHz processor bus, the performance should be greater. But the Duron, based upon the Athlon core, will replace the K6-2 CPU, which weighed in at a relatively puny 80 sq. mm. While it is not certain that the Duron will simply be an Athlon with 192 Kbytes of total cache -- 128 Kbytes of level 1 cache, and 64 Kbytes of unified level 2 cache -- the total cache is greater than the Celeron, and the die will undoubtedly be larger than the K6-2, which has been priced directly against the Celeron. The possible result? Higher prices for the Duron.

"The bus will certainly be faster," Brookwood said of the Duron. "That may make a slight difference. But in the value segment people generally buy on price, rather than features or performance."