AMD warned late Thursday that operating income for the quarter — excluding business units and charges related to newly acquired graphics chipmaker ATI Technologies Inc. — is expected to be “positive but substantially lower” than in the third quarter. The company blamed the decline on “significantly” lower average selling prices in the quarter for microprocessors, which act as the core calculating engines in computers. Unit sales were up but were offset by the falling prices, AMD said. The company did not provide details.

AMD also said revenue for the quarter ended Dec. 31 — excluding ATI-related segments — is expected to increase about 3 percent from the US$1.33 billion (euro1 billion) reported in the previous quarter.

The company is scheduled to report its fourth quarter earnings on Jan. 23. On average, analysts have been expecting the company to earn 22 cents per share on US$1.85 billion (euro1.4 billion) in total sales.

Some of AMD’s woes in the quarter can be traced to a price war with Intel as AMD battles to capture new customers and market share.

AMD has steadily stolen market share away from Intel with processors that some customers and analysts have viewed as faster and more energy-efficient than Intel’s offerings.

AMD has also signed deals with once-exclusive Intel customers like computer-maker Dell Inc.

But Intel has taken dramatic steps to halt AMD’s encroachment and reverse falling profits.

Intel has slashed the price on the company’s older chips and introduced powerful new chips with a new design that vastly reduces energy consumption while boosting power.

In September, Intel announced a massive restructuring calling for the elimination of 10,500 positions to streamline its operations. The cuts are expected to save Intel US$3 billion (euro2.3 billion) per year by 2008.

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