"We still think we can outgrow the microprocessor industry," AMD Chief Financial Officer Bob Rivet said in a presentation to analysts in New York broadcast over the Internet.

In addition, AMD said it plans to generate higher-than-projected cost savings from its $5.4 billion acquisition of ATI Technologies and intends to make a broader push in the consumer electronics market.

Rivet forecasted AMD's computer-chip shipments will rise 20% in 2007, twice the rate it estimates the industry will grow, and predicted a kinder price environment for PC chips. Rivet's comments come as some industry concern lingers about an oversupply of PC chips.

The average selling prices of PC chips have taken a hit this year.

Prices have fallen as Intel sought to deplete excess inventory amid a broad counteroffensive that included the roll out of new chips to win back market share.

These moves hurt AMD's profit margins in the third quarter, and Intel has reclaimed some market share for chips used in desktop PCs and servers that power corporate networks.

"We believe the market is responding to our product and technology leadership," said Intel spokesman Chuck Mulloy, who declined to offer Intel's 2007 shipment projections, citing the company's quiet period as the chipmaker is about to close its books on the current quarter.

AMD, the world's No. 2 maker of PC and corporate-server chips behind Intel, said that it boosted its factory output of microprocessors this year by 33% as it expanded its supply arrangements with PC makers.

It added Dell Inc. to its customer base, a key design win. Dell had previously only used Intel chips. AMD also expanded its supply relationships with Hewlett-Packard Co., International Business Machines Corp. and Lenovo Group.

At the same time, AMD will no longer be as dependent on corporations and consumers buying computers and server systems.

AMD closed its purchase of ATI Technologies Oct. 25, a move that diversifies AMD's footprint in the consumer electronics market, namely for graphics chips used in digital TVs and cell phones.

The Sunnyvale, Calif.-based company aims to grow its consumer electronics unit from $550 million in sales to $2 billion by 2011, according to Dave Orton, the company's executive vice president of visual and media businesses.

On the ATI front, AMD is squeezing more savings from the deal.

Rivet estimated that AMD would save $150 million in 2007, better than the $75 million it had originally projected. In 2008, he said that the company expects cost savings to be $220 million, better than the $125 million it had predicted.

Looking at 2007, AMD forecast its gross profit margin at 50% of sales and pegged capital expenditures at $2.5 billion. Its tax rate was estimated at 26%.

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