Quick Take: AMD's Talent Theft
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How do you fight a much larger rival? Hire its best managers.
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(InfoWorld) - The leading quote from this weekâs news comes from Intel CEO Paul Otellini: "We're doing product refreshes every two years, which is the model we invented and then stopped doing after Pentium 4, shame on us," Otellini said. "We fell off it -- mea culpa, we screwed up -- and now we're back on that pace." Otellini was speaking at a Morgan Stanley Technology Conference, but regardless of the venue, every time a CEO speaks, he or she is using analysts and journalists as a conduit to shareholders. When a CEO takes a podium to apologize to shareholders, it tends to be the board of directorsâ idea. This is an obtuse, though profuse apology. The screwup to which Otellini refers is his decision to clear Intelâs shelves of x86 property and dump it on AMD in one drop so that Intel could end the year with a bang, having had the last volley in the CPU wars. It did that. But one could liken Intelâs strategy in latter 2006 to a massive spread of fireworks thatâs sent up simultaneously. Everybody goes nuts at the spectacle of it, but after that brief rush, all thatâs left is silence and smoke, soon followed by the glow of taillights. As tacky as it is to quote oneself, I put Otelliniâs present bind succinctly in a column I wrote last August: âIntel shot its entire wad on Core microarchitecture. From here, the only place Intel can go is bigger cache, more cores, and faster clocks.â Indeed, that sums up Intelâs plans for 2007, and thereâs no swaggering spin, distraction, or buzzword bending that can make up for the enormous technology gap between Core 2 and AMDâs reengineered Barcelona quad-core Opteron. It isnât likely that Intel can play engineering catch-up, given that Otellini has pink-slipped 10,500 workers. Otellini will have more than empty cupboards and empty desks to apologize for. He set a strategy to bulk up Intelâs manufacturing capacity and to jam up AMD by forcing prices down and leaving AMD unable to meet spiked market demand. Market demand is sagging, and if it returns, AMD has the capacity advantage: It has third-party foundries standing ready to stamp out AMD CPUs if need be. Another example of poor judgment is Otelliniâs fixation on CPUs and chip sets. AMDâs acquisition of ATI put Intelâs rival in the high-margin peripherals business as well as a growing role in high-performance chip sets for Intel desktop and notebook PCs. Intelâs hostile attitude toward chip-set makers drove graphics and chip-set giant Nvidia to make surprisingly close ties with AMD despite its purchase of Nvidiaâs sole competitor. If only it ended there. Recently, Intel informed the Delaware Federal District Court that it cannot produce relevant e-mail messages that were exchanged after the filing date of AMDâs antitrust suit. Intelâs letter to the court blames individual human error while heaping detailed praise on executivesâ document retention plan. Buried in the text is the Nixonian counterpoint, âSome of the tapes appear to have been recycled.â Itâs not that Otellini hasnât done anything right. He did put the brakes on NetBurst. He won an exclusive with Apple and got Sun Microsystems to add Intel to its product line. But in the minus column, Otellini lost the companyâs gold medal exclusive PC maker, Dell, and people will wonder whose inboxes those recycled tapes might have contained. Intelâs CEO should be gilding his parachute. If he lasts out the year, it will be because Intelâs board wisely takes its time to choose a replacement. My litmus test? Find someone who believes that Intelâs yearly sponsorship of the A. M. Turing Award matters more than convincing a judge in Delaware that evidence really, truly got lost. And find a CEO who, when he or she apologizes for lousy decisions, uses the pronouns âIâ and âme.â
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An unspecified number of re-marked AMD processors were seized in a raid last week on four businesses in Taiwan, an AMD spokeswoman said today.
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After a press conference on Wednesday in which AMD Executive Vice President Henri Richard told reporters he's tired of being pushed around by Intel with regard to the accuracy of its recent performance superiority claims, ZDNet blogger George Ou turned the interrogation light back onto AMD. As Ou confirmed, data AMD used to debunk some of Intel's performance claims had since been superseded by new data that substantiates Intel.
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It's a big day for AMD, which is launching its Barcelona chip at last. Then Intel comes along with an earnings surprise.
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Intel CEO sees Net boosting consumer electronics, and PC makers put the company's Penryn into products. Plus: Nvidia's boost for AMD.
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Barcelona debacle not implicated From the gossip files: We've learned that AMD has canceled an analyst extravaganza meant to be held next week in Silicon Valley.â¦
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AMD (Quote, Chart) took the wraps off a batch of new mobile processors it hopes will steal market share away from Intel&#39;s Centrino empire.
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(InfoWorld) - Advanced Micro Devices' move to cut overhead costs by outsourcing its chip manufacturing business may backfire in the long run, according to several analysts who have downgraded the company's stock. AMD is struggling it keep its head above water after posting losses of $611 million and $574 million for its past two quarters. The company has also drawn criticism for its manufacturing, with recent reports that it will delay the full-volume launch of the "Barcelona" quad-core Opteron server chip from July to October. That would hobble AMD in its effort to compete with surging rival Intel. Although AMD's Opteron has won over many users of Intel's Xeon server chips since its launch in 2003, that trend is now in a sharp reversal, according to a June 13 report from Jon Peddie Research. In the market for workstation processors, AMD had pushed Intel's share down to 87.6 percent in the first quarter of 2006, but Intel has rebounded since then, reaching 92 percent share in the first quarter of 2007. The building pressure recently prompted some analysts to predict that AMD might stop manufacturing any chips at all and convert to a fully outsourced business model as soon as 2008. AMD said that rumor had come from a "speculative" Goldman Sachs report, but confirmed that the company is trying to focus its efforts on developing chips instead of manufacturing them, according to AMD spokesman Drew Prarie. AMD currently has a deal giving it access to IBM's chip fabrication plant in East Fishkill, New York. Under that arrangement, AMD can perform much of its research and development without having to incur the cost of owning its own manufacturing plant, he said. "We're looking to find ways to extend that model beyond research and development to the full range of the manufacturing supply chain," Prarie said Monday. "That could run the range from increasing the amount of processors we send out for chartered manufacturing, and could also include things like establishing partnerships on the manufacturing side." AMD has already taken some steps in this direction. In 2006, AMD announced a plan to give Chartered Semiconductor Manufacturing a heavier load, asking the firm to begin making the new 65-nanometer scale Athlon chips and other processors. And in May, AMD announced that it hadÂ awarded the job of manufacturing its newest graphics chips to Taiwan Semiconductor Manufacturing Company (TSMC). Now the company may be preparing to expand that model, according to a June 17 report from Citigroup analyst Glen Yeung. AMD is on the verge of making a "transformational move" such as outsourcing a larger share of low-end processors to TSMC, selling a share of the manufacturing capacity in its Fab 30 chip-making plant in Dresden, Germany, or even selling a share in its planned $3.2 billion chip plant in Saratoga County, New York, Yeung wrote. Despite AMD's insistence that such an arrangement would simply allow it to stay in the chip business while cutting costs, the uncertainty makes Wall Street analysts nervous. The Citigroup report lowered its estimate of AMD's future revenue from $1.3 billion to $1.1 billion for the second quarter, and from $5.8 billion to $5.6 billion for the full year of 2007. Those figures would represent a flat performance compared to AMD's performance last year, with $1.22 billion of revenue in the second quarter of 2006 and $5.6 billion for the full year. "We are again lowering AMD estimates, this time for 2Q07 (we had previously lowered 2H07), reflecting our field checks suggesting current conditions are weak," Yeung wrote. While Citigroup recognizes that AMD could be moving away from its own manufacturing and that could help the company cut costs, "we remain on hold for the shares given near-term weakness," he wrote. In contrast, Yeung said Intel would continue to enjoy a competitive advantage thanks to theÂ potential delay of AMD's Barcelona chips, the rising popularity of Intel's new Santa Rosa notebook platform, and the continued sales of Core-family chips for desktop PCs.
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Advanced Micro Devices (NYSE: AMD) continues to plug away at microprocessor rival Intel&#39;s (Nasdaq: INTC) lead, which once seemed insurmountable.
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Worldwide&#160;lawsuits against Intel&#160;and&#160;four straight quarterly losses&#160;have distracted AMD during its integration of ATI Technologies, but the merger remains on track, according to industry analysts.AMD&#39;s acquisition of ATI&#160;for $5.4 billion, announced in July 2006 and completed one year ago Thursday, was viewed as a potent weapon in AMD&#39;s attempt to dent Intel&#39;s domination of the x86 processor market.The lawsuits against Intel and&#160;financial losses&#160;came at a critical time, when AMD&#39;s management needed help in integrating the ATI acquisition and making ATI employees understand AMD&#39;s culture, said Jon Peddie, president of Jon Peddie Research.AMD filed antitrust lawsuits alleging monopolistic behavior against Intel in the U.S. and Japan, and lodged complaints with the European Commission, the Korean Fair Trade Commission and Japan Fair Trade Commission.The distraction was compounded by the departure of key executives, including David Orton, former president and CEO of ATI, who resigned as executive vice president of AMD in July after only 10 months.AMD didn&#39;t have any internal problems, Peddie said, and Orton left on his own accord. &quot;A little redundancy will always occur in all organizations. It&#39;s not surprising to see people shift,&quot; Peddie said. However, outside speculation about the departure may have distracted AMD during the integration, he said.AMD also took an acquisition-related charge of $76 million, or $0.14 per share, in the third quarter of 2007 ending Sept. 29. That added to the quarterly net loss of $396 million.Despite the distractions, AMD is pulling its resources together to ensure the ATI merger goes smoothly.&quot;The merger has allowed AMD to merge its plans with ATI, which were very similar prior to the acquisition.&quot; Peddie said. Both companies wanted to amalgamate the CPU with the graphics processor, and the acquisition puts them in a position to do so.A successful merger could help AMD reach profitability in a few quarters and position it for success in the future, wrote Doug Freedman, an analyst with American Technology Research, in a research report.&quot;We believe ATI is turning the corner, which is likely material to AMD&#39;s quest for profitability,&quot; Freedman wrote.The acquisition of ATI hasn&#39;t shown an immediate benefit, but could help&#160;AMD in the long term&#160;when the company&#39;s &quot;Fusion&quot; project comes to fruition, Peddie said. Fusion is the code name for is AMD&#39;s next-generation processor design that is expected to combine high-performance graphics and CPU processing on a single die. The project was announced when the merger was completed. AMD is not prepared to talk about Fusion yet, but it is intended to bring the cost of PCs down and reduce power consumption, Peddie said.AMD also announced the &quot;Spider&quot; platform, which will include AMD&#39;s upcoming Phenom chips and high-end graphics processors to provide users with the &quot;ultimate visual experience&quot; in computing, said Dirk Meyer, AMD&#39;s president and chief operating officer, on the company&#39;s third-quarter earnings call last week.With all the attention focused on Phenom and Spider, ATI&#39;s involvement in other businesses gets sidetracked, said Phil Hester, senior vice president and chief technology officer for AMD. AMD&#39;s ATI unit is a big player in supplying graphics to consumer electronics, set-top boxes and gaming consoles, Hester said. ATI supplies graphics processing units (GPUs) for Microsoft&#39;s Xbox 360 and Nintendo&#39;s Wii consoles, Hester said.&quot;Discrete GPUs will continue to be a good business for us,&quot; Hester said. AMD&#39;s graphics segment revenue grew 29 percent to $252 million sequentially, driven by the success of the ATI Radeon HD 2000 series of graphics processors.However, ATI&#39;s market share in the discrete graphics market has been hit by manufacturing problems and bad timing in bringing chips to market, Peddie said. Competitors such as Nvidia and Silicon Integrated Systems stepped up by shipping graphics chips on a timely basis, taking market share away from ATI.&quot;Market share could begin to swing back towards ATI even if it introduced simply comparable products to Nvidia in the near-term,&quot; wrote Doug Freedman in a research report. ATI&#39;s RV670 graphics card is competitive in the mainstream market with current Nvidia products, Freedman wrote.But AMD still has work to do to make the merger a success. Its biggest threat remains Intel, which maintains a stranglehold on the chip market.&quot;AMD must rebuild its brand value in the enthusiast market in order to garner better mainstream adoption and consumer recognition,&quot; Freedman wrote.
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In a move that was successfully kept secret, for the most part. AMD is making an unprecedented, near-term adjustment to its technology roadmap. As soon as the first half of next year, the company plans to introduce into the desktop CPU market a new line of Phenom triple-core processors, whose architecture was christened with the code-name Toliman just hours ago.
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After a bout of good fortune, AMD finds itself coming to grips with a resurgent Intel. Plus: Can software keep up with multicore technology?
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COMPLETE ANALYSIS of perhaps the most important CPU architectural release in AMD's history, the long-awaited response to a swarm of challenges from Intel. BetaNews talks exclusively with AMD worldwide market development manager John Fruehe, and examines five major issues which could make or break Quad-Core Opteron, and which could have lasting influence on how AMD's strategy proceeds over the next several years.
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'Nice job, guys' You have to appreciate Wall Street's unending desire to see AMD - the ultimate underdog - succeed.â¦
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Chip power has increased dramatically in the last few years, thanks to new multicore processors from Intel, AMD and other chip makers. The problem is, software developers who understand how to utilize the new hardware are in short supply.
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Lobbing olive branch to Wall Street Sometimes, experts don't know what they're talking about. Just ask AMD, which over the past 12 months has had to endure second-guessing from financial analysts and industry pundits about slumping market share, a string of financial losses, and costly distribution and design gaffes.â¦