Advanced Micro Devices Inc. (AMD) has teamed up with distributor Digital China Holdings Ltd. to tap China’s growing retail market for PC processors through a chain of 500 stores across the country, according to an AMD statement released on Friday.

Formerly the distribution arm of China’s largest PC vendor, Legend Holdings Ltd., Digital China was spun off as an independent company in 2001 and is one of China’s largest IT distributors.

Under the terms of the agreement reached with AMD, Digital China will become a distributor for the Sunnyvale, California, chip maker’s processors in China, the statement said. Digital China will distribute boxed versions of AMD’s Athlon XP, Athlon 64 and Opteron processors, which include the chip, a heat sink, a fan and a three-year warranty, it said.

To promote retail sales of AMD’s processors, Digital China plans to open 500 Digital China-AMD processor stores across China, the statement said.

“It is definitely a good move for AMD,” said Kitty Fok, director of personal systems research at IDC Asia-Pacific. “Digital China has a very good network in China and a very good brand name.”

AMD has been looking to aggressively expand its share of the Chinese market and tapping demand for build-it-yourself or white-box PCs, which typically cost less than branded PCs, could give the company a boost, Fok said.

White-box PCs accounted for 22 per cent of PCs sold in China during the second quarter of 2003, representing sales of approximately US$340 million, Fok said. “China is a very big market and a lot of it is developing, so users are looking for low-cost computers,” she said.