SiliconBeat

Chip industry watchers have been eagerly awaiting news about the progress of Intel’s graphics-oriented chip, dubbed Larrabee, which has been under development for what seems like ages.

Intel executives hope Larrabee will help them compete with the highly popular graphic chips offered by Nvidia and Advanced Micro Devices.

But when Intel gave a little demonstration of its chip last week during the Santa Clara company’s annual San Francisco event for people working on Intel-related products, the reaction among some analysts was less than awestruck.

“The 3D graphics were underwhelming” compared with those offered by Nvidia’s and AMD’s chips, wrote Global Crown Research in a note to its clients.

In its own note, Raymond James called Intel’s unveiling of Larrabee “surprisingly pedestrian” and noted that “the sad demo tells us the project is in trouble.”

Ouch!

There’s more evidence the chip industry is slowly climbing out of the recessionary muck where it’s been mired for months.

The latest good news comes from research firm IDC, which reported this week that worldwide shipments of personal computer microprocessor rose 10.1 percent from the first quarter of the year to the second.

Microprocessor shipments for the second quarter were up 12.5 percent for Intel, while those for Advanced Micro Devices rose 1.8 percent.

But don’t get too giddy just yet. IDC says the sales increases is mostly due to computer makers restocking their inventory, rather than consumers ramping up demand for PCs. Until more people start buying computers, experts warn, the chip industry will likely remain bogged down for a while.  .

Advanced Micro Devices generally left Wall Street displeased when it reported its 11th consecutive quarterly loss earlier this week. But the Sunnyvale chip maker offered one tantalizing tidbit about its recently spun-off manufacturing arm.

GlobalFoundries, the manufacturing unit that AMD and Abu Dhabi investors set up as a separate business in March, is expected to announce in coming weeks that it has its first customer other than AMD.

Since AMD still receives revenue from GlobalFoundries, having more money flowing into the manufacturing operation should help AMD. Moreover, the ability of GlobalFoundries to attract other customers should reduce AMD’s expenses, said company spokesman Drew Prairie.

“Right now, since we are the only customer, we are shouldering the costs of underutilization charges” associated with GlobalFoundries, he said. “As they add more customers, we will move to a traditional founry model,” where AMD only pays for chips it buys from the manufacturing operation.

This year’s global fall-off in shipments of graphics-oriented microchips is likely to be the worst ever tracked by Jon Peddie Research.

The Tiburon-based consulting firm estimates that graphic-chip shipments will drop 12 percent this year compared with 2008. That’s a nasty change, since shipments have seen double-digit increases every year since 2002, except for 2008 when they rose only about 6 percent.

Still, Peddie predicts a big turnaround next year, when graphic-chip shipments are expected to surge by nearly 22 percent.

“Taking together our data, interviews with suppliers and world economic forecast models, we believe the worst is over and Q3 will show recovery leading all the way through 2010, subject to seasonal adjustments,” it noted in a recent press release.

That should be good news for Advanced Micro Devices and Nvidia, two Silicon Valley companies that specialize in graphic chips.

Intel just gained ground on its longtime-microprocessor rival, Advanced Micro Devices, in the world of high-performance computers.

The latest edition of the TOP500 list, a widely watched compilation of the 500 most powerful computer systems, found Intel’s chips were in 399, or nearly 80 percent, of the supercomputers.

That’s an increase from six months ago when the Santa Clara company’s chips were in 379 or about 76 percent of the top computers.

AMD’s chips were in 43 supercomputers (about 8.6 percent), which was down from 59 six months ago.

Silicon Valley chip competitors, Intel and Advanced Micro Devices, sure don’t seem to see eye to eye on much.

The companies have been squabbling for years over AMD’s claim that Intel has monopolized the microprocessor market. And they don’t share the same view about the economic state of the semiconductor industry.

Last month, Intel CEO Paul Otellini declared that the personal-computer sales slump had “bottomed out.”

But in an interview this week with Dow Jones Newswires, AMD CEO Dirk Meyer said not so fast.

“It’s still too early to definitely say we’ve hit bottom,” Meyer advised. “You can only point to the bottom once you’ve passed it, and I can’t say we’re past it.”

Will these two chip-makers every get on the same page? .

The blog world is abuzz with rumors that Intel is about to get spanked - and hard - by European authorities, who have been investigating claims the Santa Clara chipmaker engaged in anti-competitive practices.

Some are speculating that the European Union might even fine Intel more than $1 billion.

No one is commenting at Intel or at its chief competitor, Advanced Micro Devices, which long has accused Intel of monoplizing the market for high-powered computer chips. So we’ll have to wait until the Euros issue a public statement on the matter, a development that could occur as early as next week, according to some blogsters.

Money losing Advanced Micro Devices of Sunnyvale said today it is revamping its organization, by creating four operational teams.

A products team, led by Rick Bergman, will merge the company’s effort to make graphics chips and microprocessors “into a “single unified organization.”

An Advanced Technology Group, led by Chekib Akrout, will focus on future technology innovation.The other two teams will be a marketing group, led by Nigel Dessau, and a customer group, led by Emilio Ghilardi, aimed at expanding AMD’s customer relationships.

The company also announced that Randy Allen, senior vice president for the Computing Solutions Group, is leaving AMD.