Burned by similar promises in the past, analysts are withholding their judgement on the new AMD chips until they ship later this month. But they acknowledge that AMD's chance to catch up with Intel is better than ever. Dirk Meyer, an AMD vice president and architect of the K7, said at an industry dinner on Thursday night that the chip will be faster than an Intel Pentium III chip with an equivalent megahertz rating on key performance measures, including crunching numbers for a spreadsheet or creating graphics and video for a game. He said AMD's tests show the K7 beating comparable Intel chips by 7% to 42%, depending on the software being run. Meyer said that an initial version of the chip, to ship in small volumes to key computer makers later this month, will operate at 550 megahertz. A version operating at 600 megahertz is expected later this summer; AMD expects to field a 1-gigahertz, or 1,000-megahertz, K7 in 2000, he said. That's in the same megahertz range as Intel is expected to offer. In the past, AMD has lagged behind Intel in that key performance measure, in part because of manufacturing problems. "It's a watershed event that the fastest PC microprocessor isn't going to be coming from Intel," said Michael Slater, principal analyst at Micro Design Resources in the U.S. "It could have the emotional effect of changing perceptions about AMD's role in the market." Intel officials declined to comment. But some Intel engineers privately question whether AMD's comparisons are fair. They noted that AMD also must work with other companies to make ancillary chips and motherboards, the main PC chassis that chips plug into. Slater and other analysts said that AMD must prove it can produce high volumes of the chip quickly. The company made similar promises with its last two microprocessors, the K5 and K6, only to stumble in manufacturing them profitably. Such issues forced AMD to report a $128.4 million loss in the first quarter ended March 28. The K7 could help. Slater estimates that AMD could sell the chips for $400 to $700, far above the $78 average selling price for its chips in the first quarter. Meyer said the K7 design makes it easier to boost the megahertz rating of the K7 chips without straining the tolerances of its manufacturing equipment. But Intel still has the financial resources to keep building advanced factories more quickly, Slater noted. Atiq Raza, president of AMD, said in an interview that AMD needs the K7 to expand into Intel's last big stronghold in commercial computers, especially in workstations and servers where Intel gets much of its profits. He said that AMD has been vulnerable to Intel's price-cutting in the low-end retail market because it had no other markets except portable computers to rely upon for profits.